The International Airlines Group more than doubled its profits in 2023 and surpassed its previous record set in 2019, but noted in its earnings report published today that business travel recovery still lags behind leisure.
The parent company of British Airways, Iberia, Aer Lingus, LEVEL and Vueling recorded a €3.5 billion operating profit in 2023, up from €1.25 billion in 2022 and an increase on its previous record €3.3 billion profit set in 2019.
IAG said its performance was boosted by a “strong and sustained demand for travel”. Leisure travel was the strongest driver of passenger demand across all of its cabins, the group noted in its earnings statement, while corporate travel “continues to return more slowly, in particular in short duration and short-haul trips”.
It said premium leisure demand “continued to perform very well” and, looking ahead, said overall demand “continues to be robust”.
Total group revenue for 2023 was €29.5 billion while network capacity, measured by available seat kilometres (ASKs), was up 22.6 per cent versus 2022 and was only 4.3 per cent less than in 2019.
Capacity in Asia-Pacific was nearly 60 per cent lower than in 2019 and was still 3.1 per cent short of a full recovery in Europe and 1.7 per cent down on services to Latin America and the Caribbean. However capacity to North America in 2023 was 3.2 per cent greater than in 2019 and was 1.1 per cent up on routes to Africa, the Middle East and South Asia.
With British Airways operating the “substantial majority” of IAG’s Asia-Pacific capacity pre-Covid, the airline’s 2023 network was still 9.9 per cent lower than in 2019. Vueling capacity in 2023 was up 8.5 per cent versus 2019, while Aer Lingus and Iberia capacity was 4.4 per cent and 3.2 per cent greater respectively.
British Airways’ non-premium capacity is planned to return to pre-pandemic levels this year, with long-haul capacity back to 2019 levels by 2025 and premium capacity fully restored by 2026, said IAG.
Luis Gallego, IAG chief executive officer, said: “In 2023, IAG more than doubled its operating margin and profits compared to 2022, generated excellent free cash flow and strengthened its balance sheet position, recovering capacity to close to pre-Covid-19 levels in most of its core markets.
“In 2024, we will execute on our strategy, building long-term value into the business. We will focus on strengthening our core airline businesses and on developing IAG Loyalty and our other asset-light growth opportunities, and we will do this while operating under a strong financial and sustainability framework.
“Our airlines operate in the largest and most attractive markets globally and we will continue to invest in our brands to transform the business, improve the customer experience and support the delivery of sustainable growth and world-class margins.”