British Airways parent IAG pins soaring profits on strong winter demand
Ilaria Grasso MacolaBritish Airways parent IAG says strong demand during its typically quieter winter quarter has given it renewed confidence of a successful summer – and has buoyed its longer-term outlook too.
The group on Friday (10 May) revealed a €68 million (£58.5 million) operating profit for the three months to 31 March – a more than seven-fold increase on the same period last year – while turnover grew by 9.2% to €6.4 billion (£5.5 billion).
IAG has pinned this on stronger-than-usual demand for travel after carrying more than 26 million passengers during Q1 at a load factor of 83.1% – up by 1.6 percentage points on the first quarter of 2023. This, said IAG, was fuelled by a 7% increase in capacity across the group’s airlines.
Between January and March, capacity for Latin America and the Caribbean went up by 14.4%, mainly through Iberia and BA, while Europe – through Aer Lingus, BA and Iberia – saw a 9% increase in capacity.
“The momentum for airlines shows no sign of slowing, with IAG’s Q1 results showing it has put the pandemic years firmly behind it and is ready to capitalise on improved conditions,” said Begbies Traynor partner Julie Palmer.
“The figures speak for themselves – with capacity levels significantly up in Europe across its Aer Lingus, British Airways and Iberia airlines, IAG is well-placed to take advantage of the trend for increased travel.”
This increase in seats was reflected in BA and Iberia’s results, which reported operating profits of €25.6 million (£22 million) and €70 million (£60.2 million) respectively – up on the €16.3 million (£14 million) and €66 million (£56.8 million) reported last year.
By contrast, Aer Lingus and Vueling reported losses, although while the Irish flag-carrier’s operating loss widened marginally from €81 million (£69.7 million) to €82 million (£70.6 million), the Spanish airline shrunk its loss from €64 million (£55.1 million) to €25 million (£21.5 million)
“The operating losses in Aer Lingus and Vueling reflect the nature of their businesses, with proportionately more focus on leisure segments, which are more seasonal,” the company explained in its Q1 trading update.
Looking ahead, chief executive Luis Gallego said the group was ready for a bumper summer and was hopeful too of “positive long-term, sustainable demand for travel”.
“We are well-positioned for the summer,” he added. “The high demand for travel is a continuing trend.”
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