British Airways’ parent company IAG’s financial performance has resulted in a loss in the three months leading to March 31st 2023. Over the past year, British Airways performed well overall, making a profit at year-end and for the second, third, and fourth quarters making a profit. However, the situation has not been easy. In the final quarter of last year (the three months up to December 2022), there was a 73% reduction in the profit made by IAG when compared to the previous quarter. It appears that this downward trajectory has continued with IAG’s financial performance dipping to the extent of the first quarter of this year, not only being at reduced profit but making a post-tax loss.
IAG’s Financial Performance
British Airways has not had an easy time over the past few years like many airlines. Pandemic restrictions have meant that its parent company IAG’s financial performance resulted in losses due to reduced demand. To make matters worse, when pandemic restrictions were lifted, the surge in demand was too much for airports to cope as there were staff shortages. This is because many members of staff had been laid off during the pandemic when demand was less and more time was needed to recruit new staff, as many of those who had left were now in other fields.
British Airways, however, took a proactive stance in assisting the aviation industry by taking the initiative to reduce the number of its own flights, reducing the burden on airports such as London Heathrow. The airline devised an action plan to conservatively increase its number of passengers and flights to allow time for airports to adjust and improve staff numbers.
In terms of British Airways’ parent company IAG’s financial performance, the loss it made for the three months up to 31st March 2023 was 87 million euros. Even though this was a loss and a reduction in income for the second quarter in a row, it does appear that the loss is less than for the same period last year. In the three months up to March 31st, 2022, IAG’s financial performance resulted in a bigger loss of 787 million euros. This equates to an 88.9% reduction in the loss made by IAG in the first quarter of 2023 when compared to the same period last year. Therefore, on a positive note, even though the company has made a loss, its losses are less severe than before when most pandemic restrictions were lifted.
In terms of revenue (total money received), IAG’s financial performance resulted in figure of 5.889 billion euros in the three months up to March 31st, 2023. This was a 71.4% improvement compared to last year when IAG’s revenue was 3.435 billion euros. As one can see, the reduction in the loss made by IAG in the first quarter of this year when compared to the same period last year was 88.9%, which was more than the increase in revenue, which was 71.4%. This shows that IAG is becoming better at cost control when compared to the same time last year, which is good news for the company.
In terms of the company’s response, the company’s CEO, Luis Gallego, is optimistic about IAG’s financial performance., commenting that Iberia (another one of its subsidiaries) contributed a record first-quarter profit and that all other airlines performed more than expected. He also commented that there is robust demand for services and that airlines have benefited from lower fuel prices. This may explain the better cost control noted earlier. He also added that leisure travel growth remains healthy, whereas business travel is recovering more slowly. Business travel tends to occur all year round, whereas leisure travel tends to occur more in the summer months. This may therefore explain why there was a loss in the first quarter of this year.
As one can see, IAG, even though it made a loss in the first quarter of this year, is still performing better than it was when compared to the same time period last year. IAG’s CEO is optimistic, also talking about its investments and improvements. We have to wait to see how this progresses.