International Consolidated Airlines Group (IAG) has reported a “record” first half profit of €1.3 billion, up €1.7 billion compared to the first six months of 2022.
In half-year results published on Friday (28 July) the UK-based airline group, which owns British Airways, Iberia, Aer Lingus and Vueling, reported strong demand across all its airlines as well as an “encouraging” outlook for the summer with around 80 per cent of expected Q3 revenue already booked.
IAG CEO Luis Gallego said: “Our strong profits since the start of the year are helping to fund investment for our customers and to improve our balance sheet by reducing debt.
“We are aiming to be back to pre-pandemic capacity at the end of this year.”
In the first six months of the year the group restored capacity, measured in available seat kilometres (ASKs), to 94 per cent of 2019 levels. Passenger revenue increased €4.2 billion year on year to €11.8 billion, reflecting a 30.9 per cent year-on-year increase in capacity and 6.3 percentage point increase in passenger load factor.
Passenger yields per revenue passenger kilometre (RPK) were up 9.5 per cent year on year and the resulting passenger unit revenue (passenger revenue per ASK) was 18.4 per cent higher than the previous year and 18 per cent higher than the first six months of 2019.
Total revenue for the period was €13.6 billion, including €7.7 billion in second quarter revenue, driven largely by “strong” leisure traffic recovery. Business traffic, meanwhile, is “recovering more slowly”.
Iberia and Vueling performed strongly in the first six months of 2023, with operating profit (before exceptional items) exceeding 2019 levels. Iberia also reported a ‘record’ operating profit for any quarter of €307 million.
British Airways generated an operating profit of €602 million, however this is still €255 million below 2019 levels after having reached 88 per cent of 2019 capacity levels.
IAG said capacity for British Airways has been slower to recover than other airlines due to the retirement of the carrier’s Boeing 747-400 fleet and the slower restoration of capacity in the Asia Pacific region.
Looking ahead, IAG said it will continue to be “mindful” of wider uncertainties that might affect its full-year result, pointing to the potential impact of geopolitical and macroeconomic volatility on fuel prices and consumer confidence, as well as the impact of strikes on the operating environment.
In the earnings report IAG stated that “some of our operations are not where we would want them to be and this is affecting our overall customer service”. It said the French ATC strikes are affecting “most” airlines while global supply chain issues are reducing aircraft availability.
British Airways has also been “particularly affected” by strikes at both Heathrow and Gatwick airport. In an effort to minimise disruption, the carrier recruited 4,000 people in the first half of 2023, largely in ground operations.
“We are particularly focused on delivering resilient operations over the summer, reflecting a challenging operating environment in the UK and parts of Europe,” the group said.