British Airways parent company record profit levels surpassing those before the COVID-19 pandemic

Following a robust summer that ushered in a surge of tourists on their vacation travels and strengthened the profitability of British Airways and its parent company IAG, the financial outlook has surpassed levels seen before the pandemic. The levels have been boosted thanks to a resurgence of travel to China and the Far East.

The resurgence in travel has empowered IAG, encompassing the privatized former flag carriers Iberia and Aer Lingus, as well as the Spanish holiday airline Vueling, to initiate the mending of its financial standing. With a reduction of nearly 30 per cent in net borrowings over the last 12 months to €8 billion, the company is actively addressing the debt accrued during the COVID-19 travel restrictions.

During the peak holiday season from July to September, IAG recorded operating profits of €1.7 billion, marking a 20 per cent increase from 2019 levels, alongside revenues amounting to €8.6 billion, reflective of a similar growth trajectory over the past four years. Despite a decrease in passenger numbers during this period, the 26 per cent surge in fares since pre-pandemic times has contributed to the company's financial resurgence.

Iberia emerged as a standout performer for IAG, recording profits of €449 million in the summer, 70 per cent higher than figures in 2019. British Airways also demonstrated a promising performance at €718 million, slightly exceeding its 2019 figures of €710 million. Vueling marked a 22 per cent increase at €282 million, while Aer Lingus displayed a 16 per cent improvement at €196 million.

Luis Gallego, who assumed the role of chief executive during the pandemic, hailed the third-quarter results as a historic achievement for IAG, attributing the success to sustained strong demand across all routes, especially in the North and South Atlantic, as well as popular leisure destinations in Europe.

With operating profits of €3 billion and revenues of €22 billion reported for the first nine months of the year, IAG remains optimistic about the future, dismissing concerns that the recovery may taper off. Bookings for the current trading quarters are on track, with 75 per cent of projected revenue already secured. Additionally, the group anticipates reaching 96 per cent of pre-pandemic flying capacity by the end of the year.

As the largest component of the business, British Airways is expected to contribute further to the group's growth. However, the company noted that the restoration of capacity for British Airways has been more gradual compared to other operating companies, largely due to the retirement of its Boeing 747 fleet and the slower recovery of capacity in the Asia Pacific region.

Despite experiencing a decline in shares since the peak of summer, IAG remains valued at £7 billion on the London stock market, with early trading showing a slight rise in IAG shares.