BA owner banking on summer travel spree

The British Airways owner is pinning his hopes on the summer holiday booking rage, while taking advantage of the growing demand for travel.

IAG, which is also the parent company of Iberia, Aer Lingus and Vueling, made a profit of £8 million in the first three months of the year.

That was the first profit in the January to March quarter since 2019, and a marked improvement on the loss of £648 million in the same period of 2022.

The journey back to the black was driven by high holiday demand coupled with lower fuel prices.

IAG flew 24 million passengers in the first three months of this year, compared to 14 million in the same period last year.

It said there were ‘healthy bookings ahead’ for the summer, following easyJet and Tui bosses who recently posted their own sunny outlook.

And it now expects annual profit to come in at the high end of its previous expectation, rising by more than £2bn for 2023, a 90 per cent increase on last year.

“All our airlines performed above expectations,” said CEO Luis Gallego.

The update sent shares up 2.3 percent, or 3.4 pence, to 150.5 pence. But the stock is still down more than 60 percent since the start of 2020, after planes were grounded by the pandemic.

Liberum analysts said the numbers were “surprisingly strong” in light of cost-of-living issues, which could potentially deter travelers from flying out. But IAG expects to fly 97 percent of its 2019 capacity this year, with destinations like Barcelona, ​​Amsterdam and Malaga leading the way.

Transatlantic flights were up 63 percent from last year and about 2 percent from 2019 for BA, with tourists tracking trips to Las Vegas, Orlando and New York.

Still, business flights, which BA is known for among the city’s high flyers and captains of industry, continue to drag.

Business travel volumes are still only at 70 percent of 2019 levels, with remote working and the continued use of video conferencing tools leaving noticeable gaps in business bookings.

And despite investors’ optimistic response, Richard Hunter, an analyst at Interactive Investor, said IAG’s full road to recovery was a “long-haul journey,” with the real test being how it would fare by the end of the year. IAG also has to deal with the possible consequences of strikes by French air traffic control, which have caused major disruptions.

BA canceled 300 flights over Easter due to strikes by UK airport security staff, something that is expected to continue this summer.

But airlines and vacation companies have reported strong interest in the summer.

Last month easyJet raised earnings expectations on the back of ‘strong’ summer bookings, a sign that demand is holding up despite the cost of living crisis.

Passenger numbers reached 15.6 million in the first three months of the year, more than a third more than the 11.6 million in the same period in 2022.

Fellow budget airline Tui also said customers were unwilling to give up holidays after reporting strong Easter bookings.