IAG returns to investment grade at S&P after profit rebound

British Airways parent IAG regained its investment grade credit rating from Standard & Poor’s, in a sign that efforts to rebuild the carrier’s balance sheet are paying off. The ratings company raised the airline’s long-term rating to BBB- from BB+, according to a statement Wednesday, citing improved cash flow and robust passenger demand. IAG beat expectations with its second-quarter earnings at the end of July, and said it expected to reach 97% of pre-Covid capacity this year. “IAG’s higher-than-expected air passenger fares, underpinned by efficient cost management, translate into higher-than-forecast profit margins and earnings this year,” S&P said. The move gives IAG back its investment grade status for the first time since it was downgraded in May 2020 as the pandemic took hold. The airline has been working to pare back debt, and a surge in demand has returned it to profitability. IAG reported an operating profit of E1.25b in the three months to June 30 from E301m a year earlier. The company has also been working down a long-term debt load that peaked at E7.21b in Q1 2021, based on data compiled by Bloomberg. The figure stood at E5.57b at the end of Q2. <br/>