International Airlines Group (IAG) has announced its half-year results, reporting a record operating profit before exceptional items of €1,260 million.
This achievement marks a turnaround from the same period last year when the company faced a €446 million loss.
IAG is one of the world’s largest airline groups, combining leading airlines in Ireland, Spain, and the UK. The group has a fleet of 558 aircraft, operating to 256 destinations and carrying around 94 million passengers each year.
The surge recorded in the half-year profit is attributed to IAG’s continuing strong performance across the group, with sustained robust demand across their networks.
In the second quarter of 2023, IAG’s operating profit before exceptional items reached €1,251 million, showcasing a substantial increase compared to the €295 million recorded during the same quarter in 2022. Notably, Iberia, a subsidiary of IAG, achieved a record operating profit before exceptional items for any quarter at the airline of €307 million.
Luis Gallego, chief executive of IAG, said: “Our strong profits since the start of the year are helping to fund investment for our customers, and to improve our balance sheet by reducing debt. We are aiming to be back to pre-pandemic capacity at the end of this year.
“These results are thanks to a strong performance from all companies across the group, and we would like to thank our teams for their hard work during the year so far.”
IAG’s financial health has also improved, with net debt decreasing to €7.6 billion as of June 30, 2023, compared to €10.4 billion at the end of 2022. This reduction can be attributed to the increase in profit and seasonal working capital inflows. Furthermore, IAG’s net debt to EBITDA before exceptional items ratio has significantly improved to 1.5 times, compared to 3.1 times in 2022.
Despite the challenging operating environment in the UK and parts of Europe, IAG states that it remains focused on delivering resilient operations throughout the summer, and is keen on leveraging its attractive customer base and strong network in large and growing markets to capitalise on the encouraging outlook for the upcoming quarter.
The group’s profit results also indicate a promising trajectory for the months ahead.
Gallego added: “Customer demand remains strong across the group, particularly for leisure travel, with around 80 per cent of passenger revenue for the third quarter already booked. And our airlines have put in place plans to support operations during the busy summer period.”
Dr James Fox, equity research analyst at InvestingReviews.co.uk, said: “IAG is absolutely flying right now. These earnings will be highly encouraging for investors, with operating profit coming in a considerable 39.7 per cent higher than analysts anticipated, at €1,251 million for the three months to June 30.
“This impressive growth was driven by a substantial 30 per cent beat on revenue, amounting to €7,694 million, fuelled by strong performance in US markets and a recovery in short-haul European leisure destinations, despite lower corporate travel at British Airways.
“Investors will likely be buoyed by the positive outlook. Looking ahead, the company stated that 30 per cent of Q4 revenue is already booked, which is typical for the period.
“Remarkably, these stellar results have been achieved despite the civil aviation sector’s incomplete recovery. In the first half of the year, IAG’s capacity reached 94 per cent of 2019 levels. These earnings are likely to provide a boost for IAG shares, which are currently trading at around a third of their pre-pandemic levels.”