Airline group IAG expects to return to profitability this year as passenger numbers increase


Airline group IAG has reported a surge in passenger numbers for the first three months of the year as pandemic restrictions eased and business travel recovered.

CEO Luis Gallego said the group expects to return to profitability in the second quarter and for the full year.

In its consolidated results for the year ended March 31, IAG said the lifting of Covid measures, particularly in the UK, had resulted in a “precipitous rise in capacity” at British Airways and Heathrow Airport.

The group said in a statement that they saw “no noticeable impact” from the war in Ukraine.

IAG reported an operating loss of 731 million euros for the first quarter, down 32 percent from the (adjusted) loss of more than 1 billion euros for the same period last year.

Losses after taxes and special items were 787 million euros in the first quarter, down almost 27 percent from more than 1 billion euros in the first three months of 2021.

Total revenue for the first quarter was 3.4 billion euros, with passenger revenue of 2.6 billion euros.

Adjusted loss per share fell to 16.3 cents, down more than a quarter from the loss per share in the first quarter of 2021.

Passenger capacity in the first three months of 2022 was 65 percent of 2019 capacity, up from 58 percent at the end of December.

For the year as a whole, it is planning passenger capacity of around 80 percent of the 2019 level.

Cash stood at 8.2 billion euros at the end of March, up 241 million euros since December 2021, with “significantly positive working capital, driven by bookings for the remainder of the year,” IAG said.

Cash was impacted by the financing of five Iberia aircraft, which were delivered and paid for in the first quarter but are not scheduled for delivery until the second quarter.

Aircraft finance facilities rose to 4.2 billion euros from just over 4 billion euros in December, on the back of a 200 million euros loan facility to Aer Lingus from the Ireland Strategic Investment Fund.

It brought total liquidity to €12.4 billion.

“Demand is recovering strongly in line with our previous expectations. We expect to be profitable starting in the second quarter and for the full year,” said IAG CEO Luis Gallego.

“Premium Leisure continues to be the best performing segment and business travel is at its highest level since the pandemic began.

“The Group’s operating loss declined significantly year-over-year in the first quarter, with our losses reflecting normal seasonality, the impact of Omicron and costs associated with ramping up operations.

“Across the globe, the travel industry is facing challenges due to the largest expansion of operations in history and British Airways is no exception. The welcome lifting of strict travel restrictions in the UK, combined with strong pent-up demand, have contributed to a steep rise in capacity. The airline’s current focus is on improving operations and customer experience, as well as improving operational resilience.” Airline group IAG expects to return to profitability this year as passenger numbers increase

Fry Electronics Team

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