LONDON, UNITED KINGDOM — IAG, the owner of British Airways, Iberia, Aer Lingus, and Vueling, and Air France-KLM are expecting a surge in summer bookings as the post-pandemic travel boom gains momentum.

IAG has raised its annual profit forecast, driven by consumers' willingness to pay higher ticket prices and falling fuel costs across the sector. Air France-KLM reports that demand is being bolstered by an increase in wealthier passengers opting for business class flights to Paris.

Both airlines share Lufthansa's optimistic outlook for the summer travel season, with IAG reporting "healthy forward bookings" from leisure travelers. As a result, the company anticipates full-year operating profit before exceptional items to exceed the €1.8bn to €2.3bn range it projected in February.

The industry's recovery has surpassed the expectations of many executives and investors, with consumers prioritizing travel despite rising inflation in large western economies.

IAG started the year with a profitable quarter for the first time since 2019, reporting earnings before exceptional items of €9mn compared to a loss of €741mn the previous year. CEO Luis Gallego praised the performance of all their airlines, which analysts at Bernstein described as "put[ting] other legacy airlines in the shade."

IAG anticipates flying at 97% of its 2019 capacity this year, with high demand for routes in Spain and Latin America. British Airways' flight schedules are lagging behind the rest of the group, primarily due to the slower reopening of Asia, and are projected to reach 92% this year.

While the leisure market thrives, corporate travel recovery remains sluggish. Gallego noted that BA corporate bookings in the past five weeks were at 65% of 2019 volumes, while Iberia's recovered to 95%.

Air France-KLM predicts it will return to 95% of its 2019 capacity this year, slightly lower than its previous 100% guidance. The carrier is currently operating fewer flights to China and other Asian destinations, and staffing issues persist.