SHAREHOLDERS in International Airlines Group (IAG) will see a full picture of this summer's record season of travel on Friday, as they look to determine whether the share price can fly over the quieter months of the year.

The parent company of British Airways whose shares are up over 25 per cent to date, notched up a record £1.1bn profit between January and June, swinging from a £383m loss the prior year.

The bullish recovery from Covid-era lows was reflected across the sector, as the travel sector raked in on pent-up demand.

Analysts are forecasting IAG will report operating profits in the region of €1.6bn (£1.3bn) for the third quarter of this year, which would match the equivalent period in 2019.

But investors are wary of demand dipping amid the colder winter months, along with fears that corporate travel has yet to recover to pre-pandemic levels.

The resumption of conflict in the

Middle East following Hamas's attack on Israel has bumped up global oil prices and, by consequence, the cost of jet fuel.

FTSE 100-listed airline shares plunged on the resumption of the conflict, as investors fretted over a slowdown in demand for travel to the Middle East and the increasing cost of Brent and WTI Crude.

Gerald Khoo, transport analyst at Liberum Capital, told City A.M. the focus would be on "any evidence of a slowdown in bookings or deterioration in pricing trends" - key to mitigating the impact of higher fuel prices - although he noted both had shown no sign of faltering yet.

IAG is currently "well-hedged in the short term" to rising jet fuel costs, Khoo added, but there is "still some residual exposure" which could affect the bottom line in the coming months.

The airline conglomerate, which owns BA, Iberia, Vueling and a host of other carriers, said it was "mindful" of uncertainty in the wider global economy in its record July results.

(c) 2023 City A.M., source Newspaper