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International Airlines Group Posts Record Half-Yearly Profit
The International Airlines Group (IAG) has delivered an astounding turnaround by posting a record operating profit for the first half of 2023 (1H23). The parent company of British Airways, Iberia, Vueling, LEVEL, and Aer Lingus achieved a €1.26 billion ($1.39 billion) result for 1H23. A contrast to the same period last year when the consortium reported a loss of €446 million ($492 million). The second quarter of 2023 was particularly profitable for the group, with the Spanish airlines outperforming expectations. Iberia reported its highest-ever quarterly profit of €307 million ($339 million).
IAG chief executive officer 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.” The group reduced debt by €2.8 billion ($3.09 billion) in the six months since the end of 2022, when the debt level was €10.4 billion ($11.48 billion).
The consortium’s capacity levels were at 94% of 2019 levels for 1H23 as measured by available seat kilometers (ASK). IAG forecast that British Airways is expected to “return to pre-pandemic levels of non-premium capacity in 2024; longhaul capacity by 2025; and premium capacity by 2026,” with Gallego saying the group is trying to return to pre-pandemic levels by the end of 2023.
The remainder of 2023 appears to be looking positive for IAG, with Gallego stating, “Customer demand remains strong across the Group, particularly for leisure travel, with around 80% of passenger revenue for the third quarter already booked.”
Bookings for the final quarter of the year are sitting around the 30% level, which the group noted is “typical for this time of year.”
Mindful of the chaos that impacted European airline operations over the summer holiday period in 2022, including British Airways’ Heathrow hub, Gallego said that “Our airlines have put in place plans to support operations during the busy summer period.”
The report noted that 4,000 staff were hired in the first half of 2023 mainly to support ground operations. To supplement fleet operations, the group is wet leasing four Finnair A320s, one Air Belgium A330, and three Avion Express A320s. This is in addition to 11 new aircraft deliveries the group received in the first half of the year and a further 19 that will enter service by the end of 2023.
However, the half-yearly report does express some words of caution for the future, stating, “We continue to be mindful of wider uncertainties that might affect the full year. This includes the potential impact of geopolitical and macroeconomic volatility on the price of fuel and consumer confidence, as well as the impact of external factors on the operating environment, such as strikes. Our Cargo business continues to be impacted by a weak market.”
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