International Consolidated Airlines Group (IAG), the parent company of British Airways, Iberia, Aer Lingus and Vueling, has posted a 2022 operating profit of €1.2 billion – an increase of €4.2 billion compared to 2021 – and expects to fully restore its pre-Covid capacity by Q4 this year.
The airline group generated a total €23.1 billion in revenue, with €19.5 billion in passenger revenue thanks to a “significantly profitable” fourth quarter. Seventy-eight per cent of the group’s pre-Covid capacity was restored in 2022, however this increased to 87 per cent in year’s final quarter.
The impact of Covid-19 and related travel restrictions was “significantly less than in 2021” as the group noted a “strong recovery” in leisure traffic, while business traffic “steadily improved” and looks “stable” for the year ahead.
The strong recovery in demand was reflected in the group’s passenger load factor, which reached 81.8 per cent for the year, down just 2.8 points from 2019.
IAG CEO Luis Gallego, said: “At this point of the year we continue to see robust forward-bookings, while also remaining conscious of global macro-economic uncertainties.
“We are transforming our businesses, with the intention of returning IAG to pre-Covid levels of profit within the next few years, through major initiatives to improve customer experience and operational performance,” he added.
Iberia was a standout performer among the five airlines, posting a €132 million operating profit in Q4 (€18 million more than in 2019) as the carrier “significantly grew capacity” in the Latin America and Caribbean region with increased frequencies to destinations such as Mexico and Colombia.
British Airways also strengthened its position in the final quarter, with €268 million in operating profit, however overall capacity out of London Heathrow was “lower than originally planned” due to the airport’s imposed passenger caps.
Vueling, meanwhile, adopted a new strategy to reduce its seasonality and increase aircraft utilisation during the winter season. This resulted in increased capacity in Q4 (11.2 per cent above 2019 levels), however the carrier was unable to turn a profit, reporting an operating loss of €14 million for the final quarter.
Aer Lingus was able to restore the majority of its transatlantic services in 2022 and, in addition, operated three transatlantic services from its new Manchester Airport base, where long-haul passenger capacity reached similar levels to 2019 by the end of the year.
After taking a 20 per cent equity stake in Air Europa last year, IAG has signed an agreement to acquire the remaining 80 per cent for €400 million, however this will likely take 18 months to gain regulatory approval.
“This acquisition will enable us to grow Madrid as a hub, offering a gateway to Latin America and beyond, with benefits for customers, employees and shareholders,” Gallego said.
The trading outlook for the year ahead also remains positive. As well as returning to full capacity, the group anticipates a further recovery of profits and expects to generate between €1.8 and €2.3 billion in profit (based on current foreign exchange rates and jet fuel forward prices) in 2023.
The airline group also stated that it’s “on track” to deliver its 2025 and 2030 climate targets, as well as achieve net zero emissions by 2050. The group has committed some €13.5 billion for 192 new fuel efficient aircraft between 2023 and 2028, and has secured 250,000 tonnes of sustainable aviation fuel (SAF) for 2030.