IAG Confident It Can Prove Its Resilience

Despite continued strong demand and no concerns about fuel supplies, International Airlines Group (IAG) is slowing capacity growth for the rest of the year to around one percent. That’s down on the three percent the group guided in February.

Q1 capacity growth was flat compared to last year, down two percent on the guidance. Q2 will see a one percent capacity increase compared to three, and Q3 of only two percent versus four percent. For Q4 it is too early to make predictions as the schedule is still being worked on, but Group CEO Luis Gallego said that capacity will be affected. “In principle, the growth that we expect for the year will be around one percent”, Gallego said on today’s Q1 earnings call.

Demand remains resilient: 80 percent of booked revenues for Q2 have been covered and 40 percent for Q3. “We don’t see any weakness for the time being, so we are going to continue with the current plan”, said Gallego. Customers are willing to pay the higher fares that airlines are offering to offset higher costs, not just in premium cabins but also “at the back of the bus”, as one analyst phrased it. “Long-haul Economy and Economy Plus are performing robustly. The fact that we have a greater mix of Premium Economy versus Economy is also helping with the stickiness of pricing. We see that across all our main markets”, said Sean Doyle, CEO at British Airways.