IAG reports strong profit surge in 2023

International Airlines Group (IAG), owner of airlines such as Aer Lingus, British Airways Iberia, and Vueling, has seen its full year profit after tax surge from €431 million ($467.48 million) in 2022 to €2.66bn ($2.89bn) in 2023. Its operating profit was €3.5bn ($3.80bn) in 2023, up from €1.28bn ($1.39bn) in 2022. Total revenue for the year was €29.45bn ($31.95bn). The group said a ""strong and sustained demand for travel, in particular in leisure"" played a large role in these positive results. IAG ended the year with €11.62bn ($12.6bn) in liquidity and a net debt-to-EBITDA ratio of 1.7x. Its full year capacity grew 22.6% over 2022, restoring 95.7% of its 2019 capacity, and it ended the year with its fourth quarter restoring 98.6% of 2019 capacity. IAG's fourth quarter profit after tax more than doubled from €232 million ($251.68 million) in 2022 to €504 million ($546.76 million) in 2023. Its operating profit increased by €477 million ($517.58 million) to €502 million ($544.59 million) in the same period. Its total revenue for the fourth quarter in 2023 was €7.2bn ($7.8bn). “We will focus on strengthening our core airline businesses and on developing IAG Loyalty and our other asset-light growth opportunities, and we will do this while operating under a strong financial and sustainability framework,” said IAG CEO Luis Gallego on the company’s 2024 outlook. The company is reportedly 92% booked for the first quarter of 2024 and 62% booked for the first half of the year. It is also investing to grow its capacity further, particularly focusing on restoring British Airways to its pre-pandemic long-haul capacity. The airline was at 90% of its 2019 capacity in 2023. Gallego said in an earnings call that it is ""rebuilding its network as new wide-body aircraft are delivered, replacing the 747s that were retired in 2020."" Gallego added that while IAG ""still don't have the volume that we want"", the company have had ""a very strong premium leisure demand that is offsetting the lack of volume of corporate traffic."" He added: ""Corporate traffic is coming back. And we are receiving new aircraft with more premium seats."" IAG CFO Nicholas Cadbury said that it is also updating its lounges and IT systems through investments to modernise the customer experience. IAG's low cost airline LEVEL, which connects Barcelona to the Americas, will see further investment in routes for 2024. In particular, the company is aiming to have established the airline with a new air operator certificate (AOC) that will give it further flexibility to consider short-haul flights. The company also noted that it would be “strengthening its Spanish domestic position” in investments for its Spanish low cost airline Vueling. However, the recently proposed law, which was green lit by Spanish congress earlier this month, to ban short-haul flights where a 2.5-hour train journey exists may pose some challenges to the airline. Though it remains to be seen how domestic air travel will be impacted. Additionally, Vueling CEO Marco Sansavini has now been appointed as CEO and chairman of Iberia. Carolina Martinoli will be his successor, moving on from her role as IAG chief people, corporate affairs and sustainability officer. Iberia's interim CEO Fernando Candela will step down and continue as CEO of LEVEL. ""With these changes to our management committee, we will continue to execute on our strategic priorities, to transform our businesses and to deliver sustainable growth and world-class margins,"" said Gallego. The executive shifts will come into effect as of April 2024.