Business travel continues to bounce back from the pandemic, according to quarter-one results released this week from International Consolidated Airlines Group (IAG), Air France-KLM and Lufthansa Group.
The region’s leading airline groups all reported strong corporate travel demand, largely due to the continued easing of government-imposed travel restrictions.
As passenger capacity inches closer to pre-pandemic levels, Covid-19’s Omicron variant proved troublesome at the beginning of the quarter, while the ongoing conflict between Russia and Ukraine, and the consequent spike in fuel prices, hampered ramping up efforts.
Despite citing “strong business travel recovery”, IAG – which owns Aer Lingus, British Airways, Iberia, Level and Vueling – reported an operating loss of €731 million for the first quarter. The company reported first-quarter passenger capacity at 65 per cent of 2019 levels, up from 58 per cent in the previous quarter. Available seat kilometres also increased to 49.1 million, up from 14.8 million in 2021.
In a statement on Friday, CEO Luis Gallego, said forward bookings remain encouraging, with premium leisure the strongest performing segment and business travel is at its “highest level since the start of the pandemic”.
“We expect to be profitable from the second quarter onwards and for the full year… We expect to achieve 80 per cent of 2019 capacity in the second quarter and 85 per cent in the third quarter,” he said.
Gallego also acknowledged ongoing challenges associated with “the biggest scaling up in operations in history” and said the group is currently focused on improving operations and customer experience.
Lufthansa Group saw first-quarter airline passengers more than quadruple compared with the same period in 2021, leading the company to increase capacity toward the end of the quarter.
Passenger numbers increased to more than 13 million during the quarter, compared with about three million one year prior. Capacity was up 171 per cent year over year to a recovery level of 57 per cent compared with the "pre-crisis level," to more than 45.6 million available seat kilometres. Lufthansa reported that its number of first-quarter flights increased 230 per cent year over year to more than 135,500.
"The restrictions on air traffic have largely been overcome," Lufthansa CEO Carsten Spohr said in a statement. "The past few weeks in particular have clearly shown how great people's desire to travel is. New bookings are increasing from week to week – among business travellers, but especially for vacation and leisure travel."
The company projected the airline group's volume of business travel by year-end to recover to around 70 per cent of its pre-crisis level.
First-quarter revenue more than doubled year over year to €5.4 billion, of which €3.8 billion was passenger revenue, up nearly 150 per cent from Q1 2021 levels. Still, the company reported a net loss of €584 million, which was about 44 per cent of the loss reported one year prior.
Despite a “challenging context”, Air France-KLM reported first-quarter revenue of €4.5 billion, which more than doubled from the year prior, and a net loss of €552 million. The company reported first-quarter capacity of 75 per cent of 2019 levels for the same period with yield above 2019 levels. March's long-haul load factor was 80 per cent for both the premium and economy-plus classes.
The company reported that total first-quarter passengers increased more than 200 per cent year over year to just over 14.5 million. Capacity was up 67.8 per cent year over year to more than 58,000 available seat kilometres.
Corporate travel demand was "ramping up" during the quarter to about 70 per cent recovered compared with 2019 levels, according to a company presentation that also showed Air France-KLM's long-haul and small and midsize enterprise segments performed strongly.
"March was notably very encouraging with a significant increase in demand for corporate and premium traffic, complementing the already strong leisure and [visiting friends and relatives] demand across our worldwide network," Air France-KLM CEO Benjamin Smith said in a statement.