IAG targets higher margins and dividend resumption amid robust Q3 earnings

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IAG targets higher margins and dividend resumption amid robust Q3 earnings
Credit: © Reuters.

International Airlines Group (LON: ICAG ) (IAG) has reported strong third-quarter earnings, bolstered by vigorous summer demand. The aviation giant confirmed today that it is maintaining a positive financial outlook for the remainder of the year, with operating margins expected to be between 12% and 15%. This announcement comes despite the headwinds of high jet fuel costs and political uncertainties.

At a briefing with institutional investors and analysts today, IAG CEO Luis Gallego laid out the company's strategic objectives, which include a plan to resume dividend payments that were suspended in 2019 once the firm achieves fiscal stability. Gallego underscored the importance of reducing leverage, setting a goal for a net debt-to-EBITDA ratio below 1.8x, a significant improvement from last year's ratio of 3.1.

The company's strategy includes enhancing its transatlantic market presence by improving hub operations to deliver a superior customer experience. These efforts are expected to contribute to sustainable growth and increased returns for shareholders. Additionally, Gallego highlighted the importance of fully leveraging IAG Loyalty, viewing it as a key driver for maximizing shareholder returns through sustainable growth, efficiency gains, and an improved customer experience.

Despite these positive developments, IAG's share price experienced a slight decrease to 163.35p. However, the company's focus remains on achieving a return on invested capital ranging from 13% to 16%, indicating confidence in its long-term financial health and commitment to delivering value to its shareholders.

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