IAG, the owner of five airlines including British Airways, plans to pay a dividend for the first time since the start of the Covid-19 pandemic as it reassured investors that demand for travel was still strong. The bullish outlook, as the company reported early summer profits that came close to matching last year’s record, is a boost for an industry facing growing questions over the durability of a two-year travel boom that has powered airlines across the world to record earnings. “We see continuing strong demand for travel in the attractive core markets in which we operate,” said CE Luis Gallego. His comments come as the airline group, which owns a clutch of airlines including Iberia and Aer Lingus, also said it had given up on its efforts to buy Spain’s Air Europa, after failing to persuade EU regulators that the deal would not harm competition and raise prices. The Anglo-Spanish company reported an operating profit before exceptional items of E1.2b for the second quarter, the start of the peak summer season. That topped analysts’ forecasts but was slightly lower than a record E1.3b in 2023. Many carriers have been forced to drop ticket prices to fill their aircraft in recent months, after a period of high fare rises following the end of pandemic lockdowns. This week Lufthansa and Singapore Airlines both warned that rising competition was denting their pricing power, while last month, Ryanair took investors by surprise when it announced that air fares would be “materially lower” in the summer months, following a 15% year-on-year fall in the spring. IAG on Thursday said its key markets of the North Atlantic, Latin America and Europe were “performing well”, although it noted “some softness in long-haul pricing in Dublin, as well as in the Asian markets”. In the second quarter, passenger revenue per available seat kilometre — a closely watched industry metric that is a rough proxy for ticket prices — rose 2% to E8.33. Gallego said the decision to pay an interim dividend of 30 cents a share, its first since 2019, “reflects our confidence in the business, our performance and our transformation”.<br/>