According to its most recent financial report, the International Airlines Group (IAG) reported soaring profits in July 2023. IAG announced a record operating profit of €1,251 million in the second quarter of 2023, an increase of €956 million compared to the previous year.
IAG’s Soaring Profits
IAG is the Anglo-Spanish product of a merger agreement between British Airways (BA) and Iberia in 2011. In 2012 and 2015, the IAG became the parent company of Vueling and Aer Lingus, respectively.
These profits, interestingly, contest recent Office of National Statistics (ONS) data. The ONS reported that overseas travel to the UK had yet to recover to pre-pandemic levels, noting a decrease of 14% in overseas visits in December 2022 compared to December 2019. Likewise, overseas travel from the UK has yet to recover. The ONS reported a decrease of 21% in overseas travel by British residents in December 2022 compared to December 2019.
Perhaps this can be partly explained by considering the loyalty IAG cultivates with its customers. The beginning half of 2023 saw an increase of 25% more AVIOS points redeemed compared to 2019.
Vueling and Aer Lingus were described as especially strong, with Vueling’s operating profit of €160m towers over the €90m reported in 2019. IAG notes that this increase is likely due to high demand and Vueling’s “transformation” – the promise of net zero emissions by 2050. Increased demand for leisure travel to Ireland was highlighted as contributing to Aer Lingus’ strong performance. The group also highlighted the introduction of a new route from Cleveland, Ohio, that targeted the US market and resulted in more profitable long-haul flights. The Irish airline’s profit of €121m in quarter 2 of 2023 indicates an increase compared to 2019’s €112m.
BA, the group noted, had “almost fully recovered” to its pre-pandemic figures. BA made a profit of £514m this quarter, just under the £527m reported in 2023. IAG reported continual leisure demand for the carrier; however, business trip yields had fallen compared to the previous quarter. On the other hand, Iberia saw an increase of €69m compared to 2019, with its strong performance in Latin America, the Caribbean, and North America listed as the reason for increased customer revenue. In 2022, Cirium named the Spanish Airline as Europe’s most punctual airline.
To achieve further success, IAG promises an advancement in current sustainability initiatives. The group will bankroll further research into Bioethanol Fuel Production. To ‘support long-term supply’ of labour, IAG has since implemented pilot cadet training schemes for Aer Lingus and BA.
IAG also promises further investment in the North and South Atlantic. BA is ‘focused’ on its North Atlantic network, implementing a new route to Cincinnati; Iberia will operate more flights to Bogota, Mexico, and other ‘key Latin American destinations’; and Vueling and Level will follow suit.
What do you think about this increase in profits? Have you been flying more recently? Let us know in the comments!