The parent company of British Airways, International Consolidated Airlines Group (IAG) recorded an operating profit before exceptional items of €1,260 million, an increase of €1,706 million. IAG released its financial results for the first half (H1) and quarter two (Q2) of 2023.
The Group recorded a revenue of £11.7 billion, an increase of nearly 45% year-on-year while fares were up by around 9.5% as fuel prices increased by 5.7%.
The Group reduced its net debt to €7.6 billion at June 30, 2023 due to the increase in profit and seasonal working capital inflows. The net debt at December 31, 2022 was €10.4 billion.
Profit after tax for the first six months of 2023 of €921 million over a loss of €654 million in the first six months of 2022.
IAG said the capacity of its flights has been restored to 94% of pre-pandemic levels attributing to the strong leisure traffic recovery with premium leisure segment continuing to perform very well.
Commenting on the results, Luis Gallego, chief executive, IAG Group 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. We are aiming to be back to pre-pandemic capacity at the end of this year.”
“These results are thanks to a strong performance from all companies across the group, and we would like to thank our teams for their hard work during the year so far. Customer demand remains strong across the group, particularly for leisure travel, with around 80% of passenger revenue for the third quarter already booked. And our airlines have put in place plans to support operations during the busy summer period. I think that the performance of the group is going to continue in the way that you see now,” Gallego added.
The Group restored 94% of its 2019 capacity measured in available seat kilometres (ASKs), the passenger unit revenue for the first six months was 18.4% higher than the same period in 2022, with strong leisure traffic recovery.
The Group reported a reduction in the non-fuel costs by 7.3% versus the first six months of 2022, driven by a passenger capacity increase of 30.9% and transformation initiatives,
Going ahead, the Group expects customer demand to remain strong across the Group, particularly for leisure customers, with around 80% of the third quarter already booked. The Group expects full year 2023 capacity to be around 97% of pre-COVID-19 levels, subject to disruption. The Group further expect to generate sustainable free cash flow this year and for the net debt at December 31, 2023 to reduce compared to December 31, 2022, in line with profit outperformance.
The Group’s airlines will focus on capacity restoration in their respective strongest markets with Aer Lingus focused on its US markets, targeting new cities and reopening previous destinations like Hartford as well as consolidating its Manchester base.
British Airways is continuing to focus on its traditionally strong North Atlantic markets, as well as reopening its key Asian routes
Iberia is building its capacity from Madrid to reflect strong demand in both the South and North Atlantic and Vueling continues to strengthen its presence in its core European markets and slot-constrained bases.
The Group is expecting 11 new deliveries in first half of 2023 to British Airways, Iberia and Vueling with 30 aircraft in total to be delivered in 2023 including an additional leased aircraft for LEVEL.