Lift-off for British Airways owner International Consolidated Airlines on bumper summer bookings, 5 May 2023 12:23

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Lift-off for British Airways owner International Consolidated Airlines on bumper summer bookings

05 May 2023, 12:23

British Airways plane

First profit in first quarter since pandemic
Full-year guidance lifted
Demand for leisure travel remains high

Shares in British Airways owner International Consolidated Airlines Group (IAG) made solid progress on Friday morning as it returned to profit for the first time since the pandemic and lifted its full-year guidance.

The shares were up more than 4% to 153p as it reported an operating profit of €9 million before exceptional items in the three months ending March 31, up from a loss of €718 million in the same period last year.

The group reported a 71% rise in total revenue to €5.9 billion compared to €3.4 billion in the same period last year.

Passenger revenue was up 89.9% in to €5 billion compared to €2.65 billion in the same period last year.

British Airways returned to profit in the first quarter of this year, the first time since the first quarter of 2019.

Other airlines in the group performed well: Iberia, Level and Vueling, although the company said Aer Lingus is ‘more seasonally exposed than other airlines’ but ‘it is seeing good demand to European leisure destinations as well as the USA and the Caribbean.’

Luis Gallego, CEO of IAG said: ‘IAG has delivered a strong first quarter financial performance, as group airlines recovered capacity to close 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.’

Gallego added that demand for leisure travel remained high in comparison to business travel where recovery is slower.

STRIKES COULD DENT OUTLOOK

IAG said going forward that customer demand remains strong in all IAG airlines in all regions, and it expects capacity to be around 97% of 2019 levels for the full year, as it focuses on core markets.

Fuel prices have ‘continued to be volatile in 2023, with no signs of the volatility easing in the near-term’.

Olly Anibaba, analyst at research outfit Third Bridge said: ‘Passenger demand for leisure travel remains strong in the first half of 2023 and we are in for another busy summer. However, with air traffic controller strikes looming [French ATC and Heathrow Airport], all airlines will be facing a big challenge. While business travel is recovering more slowly, the surge in demand for premium leisure travel could help offset some of the losses.’

IAG said the summer outlook remains strong with around 80% of expected second quarter revenue already booked.

It is currently expecting its full year 2023 operating profit before exceptional items to be higher than the top end of its previous guidance of €1.8 billion to €2.3 billion.

The company is also expecting net debt ‘to be better than previous guidance of materially flat year on year, and to be down in line with our profit outperformance as of 31 December 2023.’