Strong leisure travel demand sees airline company IAG profits jump 39%
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Strong demand for leisure travel has seen Aer Lingus’ parent company International Airlines Group (IAG) post record profits over the last three months but it warned geo-political and economic uncertainties remain.
According to IAG’s financial update for the period July to September, the company recorded a 39% increase in operating profit to €1.7bn compared to the €1.2bn recorded during the same period in 2022.
That topped the €1.55bn expected by analysts.
Total revenue generated during those three months came to €8.6bn - up from €7.3bn last year.
The Group’s operating profit for the nine month period was €3bn.
The company said that this was due to a capacity increase of 17.9% compared to last year with more passengers flying to European holiday destinations and further investment across its south and north Atlantic routes.
However, capacity is still 95.6% of what it was during the same period in 2019.
Despite the record profits recorded, IAG still highlighted some geographical and economic uncertainties.
It said the impact of inflation and customer confidence, as well as higher costs in the supply chains could have an impact on demand while conflict in various regions - including the developing conflict in the Middle East - could impact operations.
Luis Gallego, chief executive of IAG, said between July and September the company has seen “sustained strong demand across all routes” leading to a “record third quarter performance”.
Mr Gallego said the strong financial performance is “enabling investment in our people and allowing us to further improve customer experience”.
Aer Lingus’ total revenue increased by 16% during the three months driving strong profit growth for the company. Capacity increased by 15% across both long-haul and short-haul over the summer.
British Airways total revenue grew by 20% during the three month period with capacity growing 25%, in particular through strong leisure demand. Operating profit was £617m (€708m) and the operating margin was 15.3%.
Revenue at Iberia grew 19%, with capacity growth of 18%. Profit increased by 76% to €449m.
Low-cost Spanish airline Vueling delivered a record operating profit of €282 million.
Fuel costs for the company were down 6.2% year-on-year. The average jet fuel spot price for the first nine months of 2023 was $873 (€826) per metric tonne, 22% lower than the average spot price of $1,118 (€1,058) per metric tonne in the same period in 2022.
Total fuel costs for the year are expected to be around €7.6bn.
Employee costs increased by €568m during the first nine months of this year compared to the same period in 2022.
During the first nine months of the year, IAG took delivery of 20 aircraft to replace planes in both the long-haul and short-haul fleets. This comprised 12 narrowbody aircraft across all our airlines and eight widebody aircraft to British Airways and Iberia.
The company is expecting the full year capacity for 2023 to be around 96% of what it was pre-covid.
IAG’s gross debt reduced by €2.4bn to €17.2bn compared to the end of June.