By Emily Hawkins
British Airways owner IAG is back in the black with a profit after tax of €853m (£736m), as leisure revenue has recovered to pre-pandemic glory.
The London-listed firm swung into profit in its third quarter results – ahead of market expectations – after posting a 2021 loss of €574m.
IAG’s overall passenger capacity plans are for around 87 per cent of 2019 capacity for the fourth quarter and around 78 per cent for the full year.
Luis Gallego, IAG chief executive officer, said: “All our airlines were significantly profitable and we are continuing to see strong passenger demand, while capacity and load factors recover.”
The airline consortium also added that planned capacity for 2023 will be at 95 per cent of 2019 levels, depending on how the outlook for demand develops.
Following the positive results, IAG expects its adjusted operating profit for the full year to be around €1.1bn.
“We are confident that we can return to pre-Covid levels of operating profit after fully restoring our net core networks and fleet over the next few years,” Gallego told analysts on Friday.
Despite increasing profitability with a 12 per cent margin, British Airways’ passenger capacity was still down on 2019 levels as it was impacted by Heathrow’s passenger cap and by the Asia-Pacific market remaining closed.
“BA is working with Heathrow airport on capacity planning and the passenger volume cap will be removed at the end of October.”
Introduced this summer to ensure smoother operations, the 100,000 daily cap will be removed from 30 October.
Commenting on the results, Derren Nathan, head of equity research at Hargreaves Lansdown, said analysts remained cautious.
“IAG was keen to point out it has leading positions in its key markets and the build-up of demand during the pandemic paints a different picture to previous economic downturns,” he said.
“But as the cost-of-living crisis intensifies in many key markets, holidays are set to drop off the essentials list and so we are cautious about next year.”
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