British Airways, the owner of British Airways, will pay its shareholders a dividend for the first since the outbreak of the pandemic. The company has enjoyed a successful first half of 2024 with a positive outlook for the remainder of the year.
International Consolidated Airlines Group announced its results alongside the announcement that it will pay €50 million in termination fees after terminating its takeover bid for Air Europa, a Spanish airline.
In June, the FTSE 100 Group, in response to concerns that a merger would lead to a reduction of competition, made concessions to European Commission. The European Commission was ready to block the deal when IAG refused to provide additional remedies in response to their concerns.
Luis Gallego said, “It’s not in the best interest of our shareholders, and we’re abandoning this operation.” Gallego is the 55-year-old chief executive officer for the group.
Analysts said that the group’s acquisition decision was not surprising, but they argued it raised questions about the next steps. Tap of Portugal is a possible target.
Alex Irving, an investor at Bernstein broker, said that the shares did not appear to offer any premium for approval.
IAG announced it would pay out a three-cent dividend per share, after its operating profits for the first half of the year grew to €1.3 billion from €1.26 in the same period last year. Revenue increased to €14.7 billion from €13.6 billion.
Gallego stated that “We continue to see a strong demand for travel in our attractive core markets, North Atlantic and Latin America, as well as intra-Europe.” “We had a strong performance in the first six months of 2024 with an operating profit €49million ahead of the same time last year.”
IAG, unlike its European rivals, reported better results in the second quarter than expected. The operating profit was €1.24 billion compared to analysts’ expectations of €1.08.
IAG is a group that has a lot of strength in North America, but has very little in Asia, where the overcapacity of Chinese carriers has affected other carriers like Lufthansa of Germany. Gallego stated that “the capacity we have in these markets is very limited.” “For the moment, our projections for this year are in line.”
The BA owner is Europe’s third largest long-haul operator, competing against Lufthansa with its European carriers as well as the Franco-Dutch Air France-KLM combination. The rise of Ryanair, easyJet and other short-haul airlines has decimated their business.
IAG shares closed at 160p down 5 3/4p or 3.5 percent, but they are now 2.9 percent higher than when the year began.
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