- Airline returns to profit
- No dividend
- Buys rest of Air Europa for €400 million
Shares in British Airways owner International Consolidated Airlines (IAG) fell victim to profit taking despite unveiling a return to the black in 2022 as Covid-19 restrictions were lifted in their core markets.
The company reported a pre-tax profit of €415 million year ending December 31, 2022, compared with a pre-tax loss of more than €3 billion in the same period last year.
International Consolidated Airlines expects further recovery in profit this year, with full year operating profit before exceptional items expected to be in the range of €1.8 to €2.3 billion, based on current foreign exchange rates and jet fuel forward prices.
The shares fell 4.3% to 158.3p with investors taking some money off the table after the shares advanced more than 60% from their late September lows heading into today. The company also elected not to pay a dividend.
EXPANDING CAPACITY WITH AIR EUROPA DEAL
Elsewhere the group announced that it will buy the remaining 80% equity of Air Europa from Spain’s Globalia for €400 million.
It is hoping this deal will enable growth noting the importance of ‘Madrid as a hub, offering a gateway to Latin America and beyond’.
Passenger unit revenue was 11% higher than in 2019, with the increase seen particularly in the second half of 2022, with strong leisure traffic recovery and business traffic steadily improving. The premium leisure segment performed very well.
International Consolidated Airlines said it was committed to generating long-term shareholder value and confident in returning to pre-Covid-19 levels of operating profit within the next few years.
Luis Gallego, chief executive officer, said: ‘2022 was a year of strong recovery, driven by sustained leisure demand and markets reopening. 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. Our unique group structure allows us to maximise revenue and cost synergies, and invest capital to achieve strong returns, whilst continuing progress towards net zero by 2050.’
A FUEL-EFFICIENT FUTURE
The airlines firm is focusing on the future delivery of more fuel-efficient and modern aircraft.
So far, they have ordered 109 new short haul aircraft, bringing fuel efficiency benefits of up to 20% versus the aircraft they will replace.
In addition, they are waiting on deliveries of 59 long haul aircraft embodied with next generation products for British Airways and Iberia.
The company has invested €3.9 billion to make important improvements in fleet, customer offerings, IT infrastructure and sustainability.
It is focusing on rebuilding operational stability at London Heathrow, with British Airways operational performance improving through the summer and 7,400 new colleagues recruited in 2022.
