British Airways owner IAG shares drop on weak US market

By Shashwat Awasthi and Joanna Plucinska

(Reuters) -British Airways owner IAG on Friday flagged weakness in the U.S. economy market, sending its shares down as much as 10% even as it reported third-quarter operating profit largely in line with expectations and a rise in bookings.  

It is the latest airline group to signal a slowdown in the lucrative transatlantic market as travel from Europe to the U.S. has dropped since President Donald Trump took office with policies that some consider to be anti-trade and anti-foreigner.

IAG's shares dropped as much as 9.8% to 373.7 pence, wiping about 1.9 billion pounds ($2.5 billion) off its market value. The stock was on track for its biggest one-day drop since early 2022.          

BOOKINGS UP 

"As expected the North Atlantic market saw some softness in U.S. point-of-sale economy leisure," IAG said in a statement.

The group, which also owns Iberia, Vueling and Aer Lingus, said its passenger load factor - a measure of how efficiently it fills seats - fell in all regions, led by a 2.4-point drop on North Atlantic routes.

Passenger unit revenue - another key metric measuring average ticket revenue per passenger - dropped 7.1% for the North Atlantic region, amid an overall fall of 2.4%. 

Still, the group said it had booked 30% of its tickets for the first quarter, and Chief Executive Luis Gallego told a media call that he was not concerned about possible transatlantic weakness dragging into the coming year.

European airlines have given cautiously optimistic outlooks for transatlantic travel into 2026, with many pointing to the worst dip taking place earlier this year when Trump announced sweeping tariffs on various markets around the world. 

"We need to take into consideration that we are comparing with a very strong quarter last year," Gallego said of the third-quarter performance.

IAG's profit for the three months ended September 30 was 2.05 billion euros ($2.4 billion), up 2% from a year earlier, and broadly in line with a company-compiled consensus estimate of 2.1 billion euros.

Revenue for the quarter was flat at 9.33 billion euros and the group stuck to its full-year forecasts.

As of Thursday's close, IAG shares had soared nearly 40% this year, outpacing peers Air France and Lufthansa's 25% and 21% gains, respectively.

(Reporting by Yamini Kalia and Shashwat Awasthi in Bengaluru. Joanna Plucinska in London.Editing by Josephine Mason and Mark Potter)