IAG’s financial performance at Year End has returned the company to profit after a loss-making year in 2021. As many already know, the pandemic has taken a toll on all airlines as restrictions were imposed during this time. In addition, even once restrictions were lifted, many airlines faced issues as airports had to limit flights in order to reduce congestion due to the inability to cope with the post-pandemic surge in demand. This is because many airlines and airports had reduced staff numbers during the pandemic due to less demand.
British Airways (IAG’s subsidiary) voluntarily agreed to reduce its flights at airports such as Heathrow in order to assist in keeping the numbers down.
IAG’S Financial Performance
IAG has had a dip in its quarterly profits, making 232 million euros in the three months leading up to December 31st 2022. The quarterly profit for the three months ended September 30th (the previous quarter) was 853 million euros. This means there has been a 73% decline in profits in the last quarter of 2022 compared to the previous one. Nevertheless, the company is still making a profit and has done so for the third quarter in a row, which is good news.
In terms of the group’s performance taking the year as a whole, the company has made a profit of 431 million euros. This is a significant improvement from the previous year when it lost 2.933 billion euros. This shows that IAG has come out of the pandemic blues and that after most restrictions have been lifted, it has returned to profitability and is, therefore, for the first year since the pandemic back in the black.
Regarding IAG’s revenue, the figures released show that this was 23.066 billion euros at the year-end of 2022 as opposed to 8.455 billion euros made in the 12 months up to 31st December 2021. IAG’s revenue has increased by 2.7 times. Expenses have also increased by 94.4% for operating expenses (costs of running the service, such as staff and fuel costs) and 13.3% for non-operating expenses (for example, loan interest costs). Given that IAG’s revenue has increased 2.7 times, the proportionate expense increase is lower overall, indicating that IAG’s financial performance has resulted in better cost control.
In response to the latest figures on IAG’s financial performance, its chief executive, Luis Gallego, has said that 2022 was a year of strong recovery following the reopening of markets and what he describes as sustained leisure demand. He has said that while they continue to see robust forward flight bookings, they are also aware of macroeconomic uncertainties. Macroeconomic uncertainties include, for example, political problems such as the war in Ukraine and the performance of the world economy. He also talks about improving operational performance and the customer experience in order to raise profitability to pre- Covid levels. In addition, he also announced that IAG has now agreed to acquire Air Europa to add to existing airlines such as British Airways as well as Iberia.
IAG’s financial performance has returned to profit at the year-end of 2022, significantly improving the loss-making year in 2021. The company has mentioned that it is improving performance further to return profitability to pre-Covid levels. It also has ambitious plans to expand by acquiring another airline Air Europa. We have to wait to see how all of this progresses.
What do you think about this performance? Do you agree with our analysis? Let us know in the comments.