IAG Swung to 2022 Net Profit as Covid-19 Restrictions Eased; Sees Further Recovery in 2023 — Update – MarketWatch
By Anthony O. Goriainoff
International Consolidated Airlines Group SA said Friday that it experienced a strong recovery in its core markets as the restrictions stemming from the pandemic lifted, and that despite the macro uncertainty and inflation it expects a further recovery in profits in 2023.
The airline group–which houses British Airways, Iberia, and Vueling among others–said capacity continued to recovery in 2022, with the group hitting 2019 profitability levels by the third quarter.
Capacity for the fourth quarter was at 87% of the levels seen in 2019, with full year capacity at 78% of those levels.
Passenger unit revenue also rose above 2019 levels amid strong demand and higher prices, which helped to offset inflation. Passenger revenue for the year was 19.46 billion euros ($20.62 billion) compared with EUR5.84 billion in 2021.
Iberia and Vueling experienced the greatest return to profit versus 2019, driven by strong demand in Europe, Latin America and the Caribbean, IAG said. It added that British Airways also enjoyed rising profitability but operated the lowest passenger capacity of group airlines, at 70.3% of 2019 levels, partly due to constraints at London’s Heathrow Airport.
The company added that its agreement to acquire the remaining 80% of Air Europa–outlined late Thursday–will enable it to grow Madrid as a hub, offering a gateway to Latin America.
The FTSE 100 company said net profit in 2022 was EUR431 million compared with a net loss of EUR6.93 billion in the year prior, and against a consensus of EUR274.3 million, taken from FactSet and based on 11 analysts’ forecasts.
Pretax profit was EUR415 million, compared with a pretax loss of EUR3.51 billion the year prior. Consensus had forecast a profit of EUR397.7 million, based on six analysts polled by FactSet.
Revenue for the year rose to EUR23.07 billion from EUR8.46 billion the year before, and compared with consensus of EUR22.89 billion, also taken from FactSet and based on 20 analysts’ estimates.
Operating profit before exceptional items–the company’s preferred metric which strips out exceptional and other one-off items–was EUR1.23 billion, compared with an operating loss of EUR1.02 billion in 2021. The company had an operating profit consensus range of EUR328 million to EUR664 million.
For 2023 operating profit before exceptional items is expected to be in the EUR1.8 billion to EUR2.3 billion range, the company said.
“We continue to see robust forward-bookings, while also remaining conscious of global macro-economic uncertainties,” Chief Executive Luis Gallego said.
Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com
