IAG Is Crushing It
Why aren't investors impressed?
Dear readers,
As a blunt man myself, I love to pop into European airline earnings calls, as executives often answer questions with a directness we do not usually hear in the United States.
For that reason, I enjoyed Friday’s IAG earnings call. The group over-performed many of the financial targets it set at its 2023 Capital Markets Day,1 reporting a 15.1 percent operating margin, 1.3 points higher than last year’s result, and a return-on-invested capital of 18.3 percent.
But when an analyst asked whether IAG could make higher margins since it had made quick work of its earlier target, Group CFO Nicholas Cadbury gave an answer that surprised my American ears, which are so accustomed to executives who keep promising more, even when it’s not feasible.
Nah, he said — not really. Baring changes outside of the group’s control, this is about as good as it gets.