International Consolidated Airlines Group (IAG) has reported a “better than expected” first quarter, generating €9 million in profit, up €750 million compared to Q1 2022, and the first positive Q1 result since 2019.
In quarterly results published on Friday (5 May) 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 Q2 revenue already booked.
The group also raised its full-year profit expectations to be “higher than the top end” of previous guidance, shared in February, of between €1.8 billion and €2.3 billion.
IAG chief executive officer Luis Gallego said the group delivered a “strong” first quarter financial performance as airlines recovered capacity “to close to pre-pandemic levels”.
“Iberia contributed a record first quarter profit and all our airlines performed above expectations, benefiting from robust demand and a lower fuel price in the quarter,” he added.
“We are seeing healthy forward bookings with leisure demand particularly strong while business travel continues to recover more slowly.”
Passenger revenue across the group increased to €5 billion, up €2.4 billion from the same period time last year, reflecting the 46 per cent increase in capacity and a 9.3 percentage point increase in load factor. Passenger yields per revenue passenger kilometre (RPK) were also up 15.2 per cent and the resulting passenger unit revenue (passenger revenue per ASK) was 30 per cent higher than the previous year and 14.8 per cent higher than Q1 2019.
Leisure traffic performed “particularly strongly” for the quarter, while corporate traffic is “recovering more slowly”.
Cargo revenue fell €109 million from the previous year to €323 million, while the group’s non-airline businesses, including IAG Loyalty and BA Holidays, saw revenue increase by €177 million to €525 million. IAG Loyalty added 1.2 million new customers during the quarter, which represents a 50 per cent increase on Q1 2019.
British Airways reported its first Q1 profit since 2019, as the carrier saw “strong demand” from leisure travel to most parts of its network, while corporate travel “is recovering slowly”.
Aer Lingus, meanwhile, reported “seeing good demand” to European leisure destinations as well as to the USA and the Caribbean, while short-haul business routes and technology industry-related routes are experiencing “some softness”.
Iberia delivered its best-ever Q1 performance, with strong demand in Spain and Latin America, as well as routes to the US making it one of the world's most profitable airlines for the quarter, according to IAG. Business demand for the carrier is recovering “slightly faster” than other airlines in the group.
Vueling's strategy to build winter season capacity to leisure destinations has resulted in high unit revenue and load factors.
“As we return to more normal operations, we continue to invest in sustainability, including more fuel-efficient aircraft, and in customer experience, updating the business cabins for British Airways and Iberia,” Gallego said.
“Over the past year we have recruited thousands of new employees across the Group and strengthened our operations so that we are ready to deliver for our customers during the summer peak,” he added.
IAG expects total capacity for the year to be around 97 per cent of 2019 levels, but noted “a number of uncertainties” such as fluctuating fuel prices and the ongoing strikes in France as well as at Heathrow Airport, both of which have “directly impacted” the business.