British Airways parent group anticipates return to profitability in Q2

International Consolidated Airlines Group (IAG), the parent company of British Airways, Iberia, Aer Lingus, LEVEL and Vueling, expects to return to profitability in the second quarter of 2022 and operate 85 per cent of pre-Covid capacity this year.

The group posted an overall €2.77 billion operating loss in 2021 – down from a €7.45 billion loss in 2020 – according to its full-year results announced today, but says “strong recovery is underway”.

IAG chief executive officer Luis Gallego reported a surge in bookings when travel restrictions have been lifted and noted it is “monitoring recent geopolitical events closely to manage any potential impact”.

“Premium leisure has performed strongly at both British Airways and Iberia while business travel has started to recover especially on the transatlantic routes,” said Gallego.

“Prior to Omicron, longhaul traffic had seen the highest booking activity in October and November at over 80 per cent of 2019 levels. This was driven by the re-opening of the North Atlantic corridor and the strength of longhaul leisure markets and travellers visiting families and friends.”

In a trading outlook, the group said it expects a “significant” operating loss in Q1 of this year due to “normal seasonality, the impact of Omicron on near-term bookings and the impact on operating costs of rebuilding capacity”, but expects its operating result to be profitable from Q2 and “significantly positive for the year”.

Iberia was a standout performer among the five airlines, posting an €82 million operating profit in Q4 as it strengthened its position on routes to Latin America and the Spanish domestic market.

IAG regional capacity in 2021 was down 87.9 per cent to Asia-Pacific, 71.3 per cent to North America, 66.8 per cent to Africa, Middle East and South Asia, 64.7 per cent across Europe, and 52.3 per cent to Latin America and the Caribbean.

Overall passenger capacity and passenger revenue were 7.7 per cent and 5.9 per cent higher than 2020.

Speaking at the BTN Group's Business Travel Show Europe Kick Off event yesterday, British Airways CEO Sean Doyle said: "The UK has moved from being one of the most restricted [countries] to being one of the most open and that's a very welcome pivot and we're looking to capitalise on that."

Doyle was also optimistic about business travel's long-term prospects. "There's a bit of a shift going on because I think a year ago everybody would have said 'oh it'll never come back' and you know people are going to continue to do homeworking, and people are going to continue to work remotely. But if you take people like consultants, what I'm hearing now is actually to drive culture and to drive the kind of engagement in the sense of a team, they want people back in the office and they want to get their teams together and they view travel and meeting physically as being absolutely critical in building a sense of camaraderie and culture – that's a big shift in the way people are talking."