IAG, the parent company of British Airways, is continuing to make a profit in this financial quarter. This is because British Airways like many other airlines is continuing to recover after pandemic restrictions have been lifted. As we know, airlines were heavily affected when pandemic restrictions were in place. To make matters worse even when pandemic restrictions many airlines and airports struggled to cope with the surge in demand for air travel as many staff had been laid off during the pandemic. As a result, airports faced a lot of disruption with mass queueing, delays and flight cancellations. Consequently, airports such as Heathrow started imposing limits on the number of flights that could be handled at the airport, British Airways was one of those airlines, however, that volunteered to cut back on flights in order to reduce congestion at Heathrow. In this way, it took a proactive approach to deal with staff shortages to help airports such as Heathrow but also to reduce delays and cancellations to its own flights. So what has been the impact on IAG’s financial performance?
IAG’s Financial Performance
In terms of profit, it spears that this approach may have helped British Airways when it moved into profit in the three months leading up to June 30th.
At this time, parent company IAG reported a profit of €133 million. Profits for IAG have surged further in this quarter leading up to September 30th. In the latest financial release, IAG made a profit of 853 million euros in this quarter. Its profits have improved by over 6 times. This shows that not only is IAG in the black, but it is also surging ahead in terms of profitability. This is no easy feat given the fact that fellow North American Airlines such as Delta Airlines and Southwest Airlines are still continuing to make a profit but less than in the previous quarter.
In terms of revenue (total money received), IAG is also surging ahead with 7.329 billion euros. This is appropriately 24% more than the 5.916 billion euros made in the previous quarter. This indicates that the company is gaining more business. In particular, it appears that revenue from passengers has increased considerably contributing to the increased profitability of IAG. According to the latest figures, passenger revenue increased from 4.949 billion dollars to 6.416 billion euros, an increase of approximately 30% This means that IAG’s airlines which include British Airways are becoming more popular for travelling passengers. However, there has been a smaller dip in the profits for cargo and other revenue streams such as investments (a reduction of 9% for cargo and 3% for other income) indicating that the surge in revenue is attributable solely to an increase in passenger travel.
IAG’s Expenses And Other Developments
Expenses from the company’s operations (the expenses incurred in the provision of the services offered by IAG) have also increased from 5.623 billion euros to 6.123 billion euros. However, this increase is smaller than the 24% increase in revenue that we have seen. This indicates that costs have been increasing less when compared to money coming from passengers. This suggests that IAG is improving in terms of cost control.
All in all, therefore a positive story for IAG and its subsidiaries such as British Airways. IAG’s CEO Luis Gallego has said that there has been an increase in demand for both leisure and business travel. He also adds that leisure travel has improved to pre-pandemic levels and thanks his employees for their hard work. In addition, he also announced that the company will be acquiring 87 new short-haul planes which will help reduce costs, reduce carbon emissions as well as improve the customer experience.
As one can see IAG is moving from strength to strength in terms of its financial performance. It is not only continuing to make a profit but is surging ahead with a profit that is 6 times higher than the previous quarter. It is also expanding its fleet to reduce costs further as well as reducing its carbon footprint. We have to wait to see how this progresses.