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International Consolidated Airlines Group SA swung to profit in the second quarter of 2022, saying early Friday it was seeing strong demand for premium leisure travel and a continued recovery of business travel from the Covid-19 pandemic.
The British Airways-owner climbed to a €73 million pretax profit in the three months to June 30 from a whopping €1.12 billion loss a year before. IAG remained in loss for the half-year, though this narrowed to €843 million from €2.34 billion.
Revenue multiplied to €5.92 billion in the second quarter from €1.24 billion a year before and to €9.35 billion in the half-year from €2.21 billion.
Operating profit before exceptional items was €467 million in the first half, swung from a €2.18 billion loss a year before. IAG expects this measure to significantly improve in the third quarter and to be positive for all of 2022.
IAG flew 78% of 2019 - meaning pre-pandemic - passenger capacity in the second quarter, up from 65% in the first. It said it will fly 80% of 2019 capacity in the third quarter and 85% in the fourth.
IAG noted this is down five percentage points from previous guidance and was due to ‘challenges at Heathrow’ airport in London. The west London airport has suffered from staff shortages this summer, resulting in massive passenger queues and flight delays and cancellations.
British Airways was limited to 69% of 2019 capacity in the second quarter, due to the problems at Heathrow, but plans to increase this to 75% in the third quarter.
IAG also owns airlines such as Iberia and Vueling in Spain and Aer Lingus in Ireland. It said the two Spanish airlines were the best performing carriers in the group, boosted by domestic routes in Spain and by routes to Latin America.
IAG said that its full-year capacity will be 78% of 2019's and, more positively, that North America will be close to full 2019 capacity by year-end.
Net debt stood at €10.98 billion on June 30, and IAG expects net debt to increase by year-end compared to end 2021. It proposed no interim dividend, unchanged from last year.
‘In the second quarter we returned to profit for the first time since the start of the pandemic following a strong recovery in demand across all our airlines. This result supports our outlook for a full-year operating profit,’ said IAG Chief Executive Luis Gallego.
He added: ‘Although bookings into the fourth quarter are seasonally low at this time of year, we are seeing no signs of any weakness in demand. Our industry continues to face historic challenges due to the unprecedented scaling up in operations, especially in the UK where the operational challenges of Heathrow airport have been acute.’
IAG shares were up 0.4% at 122.35 pence in London early Friday.
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