International Consolidated Airlines Group (IAG) has announced that it exceeded market expectations in the third quarter of this year. The strong performance was mainly driven by a surge in leisure demand across all airlines within the group. Furthermore, IAG anticipates a solid recovery in 2023, with capacity levels approaching those seen before the pandemic.
IAG, the parent company of renowned carriers British Airways, Iberia, and Vueling, reported an adjusted operating profit of 1.745 billion euros ($2.12 billion) for the third quarter, surpassing last year’s figure of EUR1.22 billion. This outperformed the analyst consensus of EUR1.51 billion, according to FactSet data.
The company’s revenue for the third quarter reached EUR8.65 billion, compared to EUR7.33 billion in the same period last year. This also surpassed the consensus estimate of EUR8.33 billion.
Optimistic Outlook for 2023
IAG expects 2023 to be a year of robust recovery, with improvements anticipated in its margins, operating profit, and balance sheet. The company aims to return to pre-pandemic levels of capacity during this period.
During the third quarter, IAG increased its capacity by 17.9% compared to the previous year, reaching 95.6% of prepandemic levels. This growth was primarily attributable to a focus on holiday destinations in Europe over the summer, as well as increased investment in routes across the South and North Atlantic regions. Looking ahead to the full year, IAG predicts that its capacity will be approximately 96% of prepandemic levels.
Strong Financial Position
Luis Gallego, Chief Executive of IAG, expressed satisfaction with the record-breaking performance in Q3, stating: “This quarter represents a record third-quarter performance for IAG. This is allowing us to invest in the business and reduce a significant amount of our debt.” The company reduced its gross debt on the balance sheet by EUR2.4 billion during the quarter, bringing the total down to EUR17.2 billion as of September 30.
IAG revealed that 75% of passenger revenue for the final quarter of the year has already been booked, indicating positive forward bookings. However, the company remains cautious due to broader macroeconomic and geopolitical uncertainties that may impact its performance for the remainder of the year.