IAG beats forecasts despite terror attacks

International Airlines Group, the owner of British Airways, Iberia and Aer Lingus, warned Friday of “some softness in underlying premium demand”, despite posting a sharp jump in Q1 profits. As corporate executives cut back on premium travel — in response to sluggish economic activity and the threat of terrorist attacks — the group has said it reining in its capacity growth this year. IAG’s comments led some to consider the potential for a wider fall in the highly profitable first and business-class passenger segment. “The question is whether this is a blip,” said Gerald Khoo, transport analyst at of Liberum. “To what degree is this a lead indicator of what might happen in the wider economy?” Willie Walsh, IAG’s chief executive, said it was difficult to discern whether the slowdown had been due to recent terrorist attacks in Paris and Brussels, economic conditions, or the timing of Easter — which is always a dampener on business travel. Early indications of bookings in Q3 suggested they were beginning to return to normal levels. However, “they tend to take a number of weeks before they stabilise,” Walsh added. “It is still a bit early to call whether that pattern will be exactly same after Brussels.” Business and first class travel is a lucrative segment for airlines, generating between 10-20% of passenger volumes but 45-60% of revenues.<br/>