British Airways owner IAG posts record profits on leisure travel boom

Signal as much as Simon Calder’s free journey electronic mail for knowledgeable recommendation and money-saving reductions

Get Simon Calder’s Journey electronic mail

British Airways proprietor Worldwide Airways Group (IAG) has revealed report annual income after cashing in on resurgent journey demand, together with from leisure travellers reserving premium economic system, and enterprise class seats.

Underlying working income on the group, which additionally consists of Iberia, Vueling and Aer Lingus, greater than doubled to £3bn for 2023, larger than its earlier pre-pandemic peak in 2019.

The chief government, Luis Gallego, shrugged off the affect of the recession within the UK on demand, saying it “continues to be very robust, notably in leisure”.

“We don’t see any weak spot out there,” he added.

Nevertheless, the group admitted poor efficiency from BA at its London Heathrow hub, the place solely 60 per cent of flights departed or arrived inside quarter-hour of schedule throughout 2023.

“Consequently, vital sources have been invested to drive higher efficiency and a few early initiatives at the moment are beginning to ship enchancment,” IAG mentioned in its outcomes presentation.

Enterprise journey has been sluggish to bounce again, however has been offset by leisure travellers reserving premium seats, it mentioned.

Capability for the ultimate three months of 2023 was at 98.6 per cent of the degrees seen earlier than the pandemic struck in 2019, with full-year capability at 95.7 per cent of these ranges. It expects to develop total capability by round 7 per cent in 2024.

Mr Gallego mentioned: “In 2023, IAG greater than doubled its working margin and income in comparison with 2022… recovering capability to shut to pre-Covid 19 ranges in most of its core markets.”

He remained tight-lipped on the outlook for airfares this yr, saying solely that they might be “decided by the market”.

Company passenger demand in North America was impacted on the finish of final yr and into the primary quarter of 2024 by the Gaza battle and considerations over instability within the Center East.

However demand within the US market was exhibiting indicators of restoration within the second and third quarters.

IAG additionally claimed it’ll spend £7bn total on BA over the subsequent three years on areas similar to IT – after a string of systems-related operational meltdowns – and new plane.

“British Airways is our largest asset with large potential and that’s the rationale we’re investing,” Mr Gallego mentioned.

On-time efficiency for BA at Heathrow improved to virtually 80 per cent in January, IAG mentioned, because of “built-in planning, ongoing recruitment and coaching and higher efficiency administration”.

It additionally mentioned: “A brand new working mannequin for London Heathrow might be rolled out for the summer season.”

IAG Loyalty, its reward enterprise which oversees its frequent flyer foreign money, Avios, additionally recorded a report working revenue of £280m up 17 per cent year-on-year and 59 per cent larger than 2019.