""A strong demand for travel"" provides positive first half results for IAG

International Airlines Group (IAG) has released positive first half results for 2024, with revenues totalling at €14.7 billion – up from €13.6 billion during the same six-month period of last year, with the company noting that a ""strong demand for travel” helped to enable the positive first half performance. The airline consortium group, which consists of four airlines – British Airways, Iberia, Aer Lingus and Vueling, reported operating profits for the first half of the year of €1.3 billion, which is an increase of €49 million when compared to the same period of 2023. “We see continuing strong demand for travel in the attractive core markets in which we operate: North Atlantic, Latin America and intra-Europe,” said Luis Gallego, CEO of IAG. He continued: “We are pleased to announce a return to paying a dividend, which reflects our confidence in the business, our performance and our transformation. We are delivering on our strategy and our commitment to sustainable shareholder returns.” British Airways delivered a strong revenue performance in the first half of the year with the airlines operating profit improving by £59 million, with its operating margin improving by 0.5 percentage points to 8.2%. Similarly Spanish carrier Vueling had a strong revenue performance, with unit revenue growing by 2.6% on the back on capacity growth of 1.4%. The airline delivered an operating result of €97 million. Spain's national carrier, Iberia: “Has built shares in key, primary markets in Spanish-speaking countries, such as offering three services a day Mexico City and Buenos Aires and has been able to do so in a structurally more efficient way due to the introduction of the airlines A350 aircraft.” said IAG. Iberia is also set to launch services to Boston and Washington D.C in the winter using the A321XLR aircraft. The group continued: “Aer Lingus continues to maximise its US point-of-sale opportunity, particularly to secondary cities, such as the return to Minneapolis, British Airways has deployed an additional 3% capacity across the North Atlantic in the first half. This includes further investment in frequencies and capacity this year to San Diego, Chicago and Nashville.” Adding to this, Aer Lingus' CEO, Lynne Embleton, stated during IAG's second quarter earnings call on August 2, 2024, that she is ""re-engaging"" with the possibility of introducing the A321XLR into the airline's fleet: “Now that we have the pilot deal done that brings structural changes that are useful for the company’s expansion,” said Embleton. “We’ve got a narrowbody pay scale now, so I am re-engaging with the possibility of XLR’s, we are currently working through our options.” IAG saw an increase in passenger revenues during the first half of the year totalling €13 billion, in 2023 passenger revenues were down from this figure by 10.7%. This increase in passenger revenue was ahead of passenger capacity of 7.5%. The group experienced a fuel cost increase of 7.4% to €3.8 billion, reflecting a reduction in the average hedged price and increased capacity as well as the impact of increasing ETS costs. “Finance costs decreased by nearly €100 million, mainly due to lower gross debt resulting from early repayment last year of expensive government guaranteed debt that we raised through the pandemic. At the same time our finance income increased by €20 million, mainly due to higher interest rates we were seeing in the period,” said Nicholas Cadbury, chief financial officer at IAG. Cadbury continued: “We recognised exceptional tax credit of €135 million which related to the revocation of a royal decree in Spain which limited the tax deductibility of some losses of the fiscal years of 2016 to 2023. Thirdly by deciding to draw away from the Air Europa acquisition process, this is reflected with a provision of an exceptional charge of €50 million, corresponding to the breakup fee.” As of June 30, 2024, IAG had total liquidity of €13.2 billion – on December 31, 2023, at the start of the financial period, the group had total liquidity of €11.6 billion comprising cash, cash equivalents and interest-bearing deposits of €9.7 billion, €3.3 billion of committed and undrawn general facilities and a further €149 million of committed and undrawn aircraft specific facilities.  At the end of the period the group has no financial covenants associated with its loans and borrowings. Looking a bit closer at the group's second quarter, the three months up to June 30, 2024, IAG reported a total revenue of €8.3 billion – a 7.8% increase in comparison to the same quarter of 2023.