In a full-year trading update, issued on Thursday (29 February), IAG said demand – particularly for leisure travel – remained robust, with the group more than 90% booked for Q1 and nearly two-thirds booked for the first half of the year – ahead of where it was at the same point 12 months ago.
IAG, which also owns Ireland’s Aer Lingus, Vueling and Iberia, restored 95.7% of 2019 capacity during its 2023 full-year (year to 31 December 2023), with this figure reaching 98.6% in Q4.
However, BA’s rebound – IAG said – has been stymied by a slower rebound in its Asia Pacific region, with full-year capacity at BA reaching only 90.1% of 2019 levels last year.
The group now expects BA to return to pre-pandemic levels of non-premium capacity this year, with long-haul capacity set to follow next year and premium capacity in 2026, putting its decisions of BA capacity down to "ensuring disciplined capacity deployment".
Nonetheless, IAG’s total full-year revenue increased by more than a quarter last year from €23 billion (£19.7 billion) to €29.5 billion (£25.3 billion). IAG also more than doubled its operating margin from 5.4% in 2022 to 11.9% in 2023, citing its ongoing "transformation programme".
As a result, underlying operating profit hit a record €3.5 billion (£3 billion) in 2023 – nearly triple the €1.28 billion (£1.1 billion) it made in 2022 and ahead even of 2019’s €3.25 billion (£2.78 billion).
IAG chief executive Luis Gallego on Thursday said he did see any weaknesses in the UK market specifically, The Independent reports, with Gallego adding the group continued to see BA as its biggest asset.
Gallego also stressed in the group’s trading update IAG had "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".
Changing priorities
IAG said airline markets worldwide has been "particular strong" in 2023, driven by increased demand for experiences and changes in "lifestyle priorities" post-pandemic.
"Leisure travel has been the strongest driver of passenger demand across all of our cabins," said IAG. "Corporate travel continues to return more slowly, in particular in short duration and short-haul trips."
The group highlighted "disruption" as a major cause of cost inflation last year, and as well as the biggest factor negatively impacting IAG’s customer net promoter score, which IAG said increased "very slightly" in 2023 thanks to "investments in new products and services".
