British Airways owner see shares take-off thanks to dividend and deal exit

British Airways owner International Consolidated Airlines Group (LSE:IAG) shares traded higher on Friday, rising more than 5%, after it announced will pay its first dividend since the pandemic.

It also announced it has decided to bail out of a €500 million deal to acquire Spanish airline after IAG (which as well as BA also owns Iberia, Aer Lingus and Vueling) encountered friction on the anti-trust side, after the European Commission launched a probe into the deal back in January.

IAG will have to pay a €50 million break fee as it exits the deal.

Meanwhile, quarterly financial results, released after Thursday’s close, revealed that operating profit ahead of market expectations at £1.2 billion – albeit it had reduced year-over-year from €1.2 billion in the same period of 2023.

Revenue for the second quarter climbed 7.7%, whilst the total for the first six months of the year improved by 2.8% to €14.7 billion. Free cash flow for the half amounted to €3.2 billion.

Looking ahead, the group of airlines forecasts around 7% capacity growth.

For shareholders, IAG is to pay out a 3 cents per share interim dividend.

“The resumption of dividends highlights the strength of cash generation and the balance sheet,” said Panmure Liberum analyst Gerald Khoo said in a note.

“Management’s outlook for the year remains positive and we raise our already above-consensus forecasts modestly.”

The broker rates the airline group as a ‘buy’, with a share price target of 450p.

In London, on Friday, shares in BA’s parent company had climbed 9.35p or around 5.9% changing hands at 169.35