IAG’s financial performance has resulted in a profit the 12 months up to 31st December 2023. This is good news for the company which remains in the dark. As we know the situation has not been easy for many airlines since the pandemic when many airlines made losses after governments around the world imposed travel restrictions and demand for flights lowered. To make matters worse even after restrictions lifted airlines suffered due to staff shortages at airports because many staff had been laid off during the pandemic when demand was less. This resulted in mass congestion at airports such as London Heathrow, leading to flights being delayed or cancelled. British Airways, part of the IAG group of airlines, was however credited with taking the initiative to reduce its own flights before mandatory restrictions were imposed.
IAG’s Financial Performance
In terms of IAG’s financial performance, in the 12 months up to 31st December 2023, the company made a profit of 2.655 billion euros. This is over 6 times more than the 431 million euros made in the 12 months up to 31st December 2022. This shows that the improvement has been very significant. The strong performance in the second and third quarters of the year no doubt helped to contribute to this in spite of the weaker loss making first quarter.
In terms of revenue, IAG’s financial performance resulted in a figure of 29.453 billion euros in the 12 months up to 31st December 2023. This is 27.7% higher than the 23.066 billion euros made in the previous year. As one can see, IAG’s airlines have grown in popularity over the year. In addition the fact that profit has increased to a greater extent indicates that IAG has also greatly improved its ability to improve cost.
Individual Airlines
In terms of the performance of individual airlines, the bulk of the revenue which contributed to IAG’s financial performance comes from British Airways which posted a figure of 16.459 billion euros. This was followed by Iberia which had a revenue of 6.958 billion euros, Vueling which figure of 3.198 billion euros as revenue and then Aer Lingus with a revenue of 2.274 billion euros. IAG does have other investments in other related companies such as those connected with airport functions and insurance companies. It also receives income from its loyalty program IAG loyalty where customers can collect points by shopping at partner stores such as John Lewis and Marks and Spencer and receive discounts on flights. However the main income of revenue does come from its airlines.
For all airlines it appears that income has increased over the past year and therefore all have contributed to the improvement in IAG’s financial performance. For British Airways the revenue was 12.921 billion euros, Iberia had a revenue of 5.551 billion euros, Vueling had a revenue of 2.598 billion euros, and Aer Lingus’ revenue of 1.769 billion euros. This means that British Airways revenue improved by 27.4%, Iberia’s revenue improved by 25.3%, Vueling improved by 23.1% and Aer Lingus by 28.6%. This means that the Irish flagship carrier Aer Lingus has improved slightly more than others int terms of customer popularity, followed by British Airways and then by the two Spanish airlines the flagship carrier Iberia and then Vueling.
The Chef Executive’s Response
In terms of the company’s response, Luis Gallego, the company’s Chief Executive Officer has commented that IAG’s financial performance has been strong. This has allowed the company to reduce its debts. He has said that the company has the drive to improve further with transformation at the heart of improving IAG. This will involve looking at areas in detail to identify areas which can be improved upon with an emphasis on improving customer service.
The company has over 600 individual projects aimed to achieve this with a focus on what he describes as on time performance (which essentially means improving efficiency and punctuality). He also seeks to improve IAG’s financial performance via increasing the revenue generated by less asset intensive revenue streams (sections of the company that don’t require purchase of planes, property or other equipment for example) such as IAG loyalty. In terms of sustainability, he has reaffirmed the company’s commitment to having a target of 10% of its fuel from SAF (Sustainable Aviation Fuel) by 2030.
The Chairman’s Response
The company’s Chairman Javier Ferran has also commented on IAG’s financial performance. The Chairman is normally associated with management of the company’s board of directors but unlike the Chief Executive is not involved in the day to day running of the company. He has commented that he wants the sector to be a force for good. He has said that IAG wants to have a positive effect on the economies that it operates.
For the first time IAG in partnership with consultants PwC conducted a study which found that IAG supports 600,000 jobs in the UK and European Union and contributed nearly 70 billion euros to their Gross Domestic Products (GDP). GDP is a measure of the total income earned by a country. So in this case IAG has contributed to the income of the European Union as well as the UK. Ferran has also emphasised the importance of the company’s commitment to sustainable development in addition to IAG’s financial performance.
In conclusion IAG’s financial performance is improving year on year. In addition the companies individual airlines have all improved in performance. The company’s Chief Executive Officer and Chairman have both talked about IAG’s financial performance in terms of the company’s own performance as well as the contribution to the wider community. In addition they have both expressed a commitment to sustainable growth. We have to wait to see how this progresses.
