IAG reports record third quarter as demand continues to recover
Sharecast
Published Oct 27, 2023 08:53
IAG reports record third quarter as demand continues to recover
Sharecast - The FTSE 100 company, which also owns airlines including Iberia and Aer Lingus, said that performance translated into an operating margin of 20.2%, up from the 16.6% margin it recorded a year ago.
It reported a capacity increase of 17.9% year-on-year and was now at 95.6% of the capacity of the third quarter of 2019, before the pandemic.
The airline group said it focussed on European holiday destinations during the summer and additional investments in routes across the south and north Atlantic.
That expansion was supported by the delivery of 20 new aircraft throughout the year.
Meanwhile, Passenger unit revenue saw a year-on-year increase of 2.2%, reaching 24.6% compared to 2019, which the company put down to sustained high demand for leisure travel.
Despite increased disruptions across the business, including the UK NATS air traffic control outage in August, IAG said it managed to reduce its non-fuel unit costs for the quarter by 3.5% compared to 2022.
British Airways (LON:ICAG) incurred the majority of the additional costs.
IAG also reported a 6.2% reduction in fuel unit costs for the quarter, contributing to its overall profitability.
The firm said it was committed to strengthening its balance sheet, reporting a €2.4bn reduction in gross debt, bringing the total to €17.2bn as of 30 September, compared to 30 June 30.
Notably, the early repayment of a £2bn UKEF-backed loan and the €0.5bn IAG bond repayment on maturity played a pivotal role.
IAG said its financial management led to an upgrade by S&P, elevating both IAG and its British Airways operation to investment-grade status.
Looking ahead, IAG said it was confident in customer bookings for the fourth quarter, which aligned with expectations.
The company expected the whole year to be one of a strong margin recovery, operating profit and its balance sheet, moving closer to pre-Covid capacity levels.
“This quarter represents a record third quarter performance for IAG,” said chief executive officer Luis Gallego.
“This is allowing us to invest in the business and reduce a significant amount of our debt.
“During the third quarter we saw sustained strong demand across all our routes, in particular the North and South Atlantic and in all leisure destinations around Europe.”
Gallego said the company was developing its hubs of Barcelona, Dublin, London and Madrid, supported by fleet deliveries and future orders.
“Our strong financial performance is enabling investment in our people and allowing us to further improve customer experience.
“At the same time, we will keep working towards our sustainability goals.”
Reporting by Josh White for Sharecast.com.
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