The owner of British Airways has notched up record annual earnings after cashing in on the post-Covid bounce back in global travel demand.
International Airlines Group (IAG) reported underlying operating profits of €3.5 billion (£3bn) for 2023, nearly three times the €1.3bn it reported in 2022 and higher than its pre-pandemic peak.
The group – which also owns airlines Iberia, Vueling and Aer Lingus – said demand continues to be robust, particularly from leisure travellers, with the group’s airlines 92pc booked for the first quarter of the year and 62pc booked up for the first half.
Its results showed that pre-tax profits for the year jumped to €3.1bn from €415m in 2022.
However, shares fell 1pc amid concerns over aircraft availability and softer demand for routes to and from Asia.
The company announced a new order for six Boeing 787-10 aircraft to be delivered to British Airways in 2025 and 2026, and one new Airbus A350-900 aircraft for Iberia.
IAG chief executive Luis Gallego said: “In 2023, IAG more than doubled its operating margin and profits compared to 2022… recovering capacity to close to pre-Covid 19 levels in most of its core markets.”
In the fourth quarter, underlying earnings lifted 5pc to €502m.
The group said capacity for the final three months of 2023 was at 98.6pc of the levels seen before the pandemic struck in 2019, with full-year capacity at 95.7pc of those levels.
At BA, capacity recovered more slowly to 90.1pc of 2019 levels due to the slower rebound in Asia Pacific.
The group said it expects to grow overall capacity by around 7pc in 2024.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “IAG hasn’t really taken off since the Covid-19 pandemic, with the shares broadly where they were during the summer of 2020.
“But, easyJet’s return to the FTSE 100 confirms that conditions are generally smoother for airlines and today’s results from IAG may just be the catalyst its share price needs.
“Profits have surged and the group looks like it will generate significant amounts of free cashflow this year, underpinned by strong bookings for the first half of 2024.
“There are, however, still clouds on the horizon, with aircraft availability and softer demand for routes to and from Asia likely to be ongoing challenges.”
