BA Owner Raises Profit Forecast as Travel Demand Rebounds

The owner of British Airways, International Airlines Group (IAG), has raised its profit forecast for the year as it reported a strong rebound in travel demand, especially for leisure trips.

IAG, which also owns Iberia, Aer Lingus and Vueling, said on Friday that it expected to fly almost the same number of passengers this year as it did before the coronavirus pandemic, reaching about 97% of its 2019 capacity.

The group also said it made an operating profit of 9 million euros ($10.2 million) in the first quarter of 2023, the first time it has been profitable since the start of the health crisis in 2020. This compares with a loss of 718 million euros in the same period last year, when most of its flights were grounded due to travel restrictions.

The improved performance was driven by a surge in demand for holiday travel, as well as a gradual recovery in business travel. IAG said it saw strong bookings for long-haul and short-haul flights, with British Airways benefiting from its routes to North America and Asia, and Vueling from its presence in Spain and Latin America.

IAG also said it had lower fuel costs and higher ticket prices than expected, which helped boost its profitability. The group now expects its underlying operating profit for the full year to be higher than the previous range of 1.8 billion to 2.3 billion euros.

Luis Gallego, IAG’s chief executive, said: “We are seeing healthy forward bookings with leisure demand particularly strong while business travel continues to recover more slowly.”

He added: “As we return to more normal operations, we continue to invest in sustainability, including more fuel-efficient aircraft, and in customer experience, updating the business cabins for British Airways and Iberia.”

IAG’s shares rose by 3.6% on Friday morning, making it the top performer on the FTSE 100 index of leading UK companies.

The group’s results reflect the recovery of the airline industry after a devastating year in 2020 and a challenging start to 2021, when a new wave of Covid-19 infections and variants led to renewed travel bans and lockdowns.

Since then, the rollout of vaccines and the easing of travel restrictions have allowed airlines to resume flights and attract customers eager to travel again after months of confinement.

However, IAG also warned that it still faced uncertainties and risks over the coming months, such as the volatility of fuel prices, the possibility of new Covid-19 variants and outbreaks, and the impact of geopolitical tensions and inflation on the global economy.

The group also said it had “limited visibility” of customer bookings for the second half of the year, when it will be hoping to avoid a repeat of the chaos of last summer, when it had to cancel or reschedule thousands of flights due to staff shortages and strikes at Heathrow airport.

IAG said it had recruited thousands of new employees across the group and strengthened its operations to cope with the expected surge in demand during the peak summer season.

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