British Airways owner IAG more than doubles profit on sustained travel demand
Parent of BA and Iberia is confident of further growth and has alternatives should the rollout of Boeing’s MAX 10 be delayed
29 February 2024 - 19:55
byJoanna Plucinska
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
A British Airways jet at the airport at Chateauroux, France. Picture: REUTERS/Pascal Rossignol
London — British Airways parent IAG said on Thursday it had more than doubled its operating profit last year and gave a positive outlook for 2024 on sustained travel demand.
European airlines have so far reported strong summer forward bookings as they benefit from a continuing post-pandemic travel boom, but concerns about high fuel prices and geopolitical uncertainty have weighed on their outlooks.
“In 2023 IAG more than doubled its operating margin and profit compared to 2022, generated excellent free cash flow and strengthened its balance sheet position,” IAG CEO Luis Gallego said in a statement.
Gallego added that the Middle East conflict had affected mostly corporate demand in the last quarter of 2023 and the first quarter of 2024, but was expected to recover.
Unlike other airlines, IAG said it was not concerned about capacity for the year to come and was not expecting delays in deliveries from Boeing this year. Gallego said that if the certification of the 737 MAX 10 is slowed, the airline can convert to other variants.
The US plane maker is mired in a regulatory audit and has been prohibited from increasing 737 MAX production since a panel blew out of a new Alaska Airlines MAX 9 in midair on January 5. Airlines such as Ryanair have said they expect delivery delays.
“For the time being we aren’t worried. We are sure they’ll fix the situation,” Gallego said.
IAG’s full-year operating profit was €3.5bn, up from €1.22bn in 2022, while its debt, which has been a concern to investors and has weighed on its shares, fell to €9.2bn from €10.4bn.
The group, which also owns Iberia, said it would continue investing in BA in particular as part of its growth strategy and that it would aim to improve its website and customer service.
“IAG is also hoping to boost efficiency by reducing disruption. These are all great targets, but the pace of delivery is far from guaranteed. It’s crucial that BA gets this right,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
British Airways owner IAG more than doubles profit on sustained travel demand
Parent of BA and Iberia is confident of further growth and has alternatives should the rollout of Boeing’s MAX 10 be delayed
London — British Airways parent IAG said on Thursday it had more than doubled its operating profit last year and gave a positive outlook for 2024 on sustained travel demand.
European airlines have so far reported strong summer forward bookings as they benefit from a continuing post-pandemic travel boom, but concerns about high fuel prices and geopolitical uncertainty have weighed on their outlooks.
“In 2023 IAG more than doubled its operating margin and profit compared to 2022, generated excellent free cash flow and strengthened its balance sheet position,” IAG CEO Luis Gallego said in a statement.
Gallego added that the Middle East conflict had affected mostly corporate demand in the last quarter of 2023 and the first quarter of 2024, but was expected to recover.
Unlike other airlines, IAG said it was not concerned about capacity for the year to come and was not expecting delays in deliveries from Boeing this year. Gallego said that if the certification of the 737 MAX 10 is slowed, the airline can convert to other variants.
The US plane maker is mired in a regulatory audit and has been prohibited from increasing 737 MAX production since a panel blew out of a new Alaska Airlines MAX 9 in midair on January 5. Airlines such as Ryanair have said they expect delivery delays.
“For the time being we aren’t worried. We are sure they’ll fix the situation,” Gallego said.
IAG’s full-year operating profit was €3.5bn, up from €1.22bn in 2022, while its debt, which has been a concern to investors and has weighed on its shares, fell to €9.2bn from €10.4bn.
The group, which also owns Iberia, said it would continue investing in BA in particular as part of its growth strategy and that it would aim to improve its website and customer service.
“IAG is also hoping to boost efficiency by reducing disruption. These are all great targets, but the pace of delivery is far from guaranteed. It’s crucial that BA gets this right,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Reuters
Boeing gets 90 days to come up with plan to fix quality issues
Ryanair warns of summer flight cuts after Boeing delays
‘Revenge travel’ allows airlines to push prices of flights ever higher
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
JetBlue soars after Carl Icahn reports nearly 10% stake
Financiers grapple with plane shortages in the wake of Boeing MAX crisis
Cathay Pacific cuts flights to avoid cancellations in run-up to Lunar New Year
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.