IAG reports strong First Quarter, forecasts positive outlook for 2024

Luis Gallego, IAG Chief Executive Officer, commented about IAG’s First Quarter results: “Our transformation initiatives and increased demand, including over the Easter holidays, have delivered another very good set of results with improvements to both revenue and operating profit.

“Our Group benefits from the strength of our core markets – North Atlantic, South Atlantic and intra-Europe – and the performance of our brands. Investment across the Group in transformation is delivering encouraging improvements in punctuality and customer experience at our airlines. IAG Loyalty continues to perform very well. We are well-positioned for the summer. The high demand for travel is a continuing trend.”

Financial highlights for the first quarter of 2024

Passenger revenue per available seat kilometre (‘ASK’) for the first quarter was 4.4% higher than in the first quarter of 2023, through the benefit of the timing of Easter and a continued strong leisure traffic recovery, with business traffic recovering more slowly
Non-fuel unit costs increased by 3.7% versus quarter one 2023, driven by investments in the business and the impact of wage settlements agreed during the course of 2023
Fuel unit cost was down 4.9% versus the first quarter of 2023, linked to lower effective average fuel prices net of hedging and the benefits of IAG’s more efficient aircraft deliveries
Operating margin before exceptional items for the first quarter was 1.1%
Loss after tax for the first quarter of 4 million euros (Q1 2023: loss after tax of 87 million euros)
Net debt has reduced in the quarter to 7.4 billion euros (31 December 2023: 9.2 billion euros, 31 March 2023: 8.4 billion euros)

IAG increased capacity for the North Atlantic region by 0.6% in the first quarter, with incremental growth at Aer Lingus, British Airways and Iberia. Unit revenue increased by 6.5% with good demand in both the business and leisure segments.

The Group has continued to invest in the strongly growing Latin America and Caribbean region, mainly through Iberia, but also adding capacity at British Airways and LEVEL, delivering overall capacity growth of 14.4% in the first quarter. Continuing strong demand has supported pricing, with only a small unit decline of 1.4%, on top of the substantial capacity increase.

IAG’s capacity growth to Europe was 9.0% in the first quarter, with growth in particular at Aer Lingus, British Airways and Iberia. The continuing demand for travel between major European cities across all of our airlines, in particular for leisure, as well as the benefit from the timing of the Easter weekend, has delivered unit revenue growth of 5.7%.

Domestic region (Spain and UK) capacity growth was 6.5% in the first quarter, mostly in Spain through Iberia and Vueling. As in the remainder of Europe, robust demand for travel and the Easter weekend has supported a unit revenue increase of 6.9%.

The rest of the world is currently more challenging. Capacity to the Africa, Middle East and South Asia region increased by 0.4% and unit revenues have declined by 3.4%. In particular the conflict in the Middle East has impacted flying by most of our airlines to the region. Capacity to the Asia Pacific region, only 3.7% of Group capacity, increased by 43.4%, mainly reflecting the
annualisation of British Airways’ route restoration in 2023. This large capacity increase has led to a unit revenue decline of 12.6% in the quarter.

On 1 April, BA Holidays transferred to IAG Loyalty. This will support BA Holidays’ ambitious growth strategy, add value to IAG Loyalty and deliver more for our customers and our airlines within IAG.  IAG continue to make progress through the Air Europa acquisition process and have presented a package of remedies to the European Commission. Its expectation remains for the process to complete later this year.

Outlook

Expecting positive long-term, sustainable demand for travel
Well-positioned for the summer
IAG’s full year capacity plans remain for around 7% ASK growth, with investment in our core markets
Group continue to expect non-fuel unit costs to increase slightly for the year as we continue to invest in the business
IAG continue to expect to generate significant free cash flow and to maintain a strong balance sheet
Focused on its strategy to deliver world-class margins and returns
Committed to sustainable shareholder value creation and cash returns

The article IAG reports strong First Quarter, forecasts positive outlook for 2024 first appeared in TravelDailyNews International.