Iberia, Vueling drive IAG return to profit in Q2

IAG returned to profit in the second quarter as its Iberia and Vueling airlines were boosted by post-Covid pandemic demand.

The company on Friday said operating profits for the three months to June 30 came in at €293m, compared with a loss of €967m a year earlier. IAG, which also owns British Airways, posted an operating loss for the half year of €438m, significantly lower than 2021’s €2.03bn.

IAG, which also owns Aer Lingus, said its passenger capacity reached 78% of pre-pandemic 2019 levels during the second quarter, boosted European and North American demand and premium travel.

It expects overall passenger capacity to be around 80% of 2019 levels in the third quarter, and around 85% in the final three months of the year, a reduction of 5% for the second half of the year compared with previous guidance due to disruption at London's Heathrow which has imposed passenger caps amid chaos this summer due to lack of staff at the airport and airlines.

IAG said the “challenging operational environment at Heathrow” meant British Airways’ capacity was limited to 69.1% of pre-pandemic levels between April and June.

"Our industry continues to face historic challenges due to the unprecedented scaling up in operations, especially in the UK where the operational challenges of Heathrow airport have been acute," said chief executive Louis Gallego.

Operating profit before exceptional items was forecast to be “positive” for 2022 as a whole if there are “no further setbacks related to Covid-19 and government-imposed restrictions or material impacts from geopolitical developments”.

“In the second quarter we returned to profit for the first time since the start of the pandemic following a strong recovery in demand across all our airlines. This result supports our outlook for a full-year operating profit," Gallego said.

“Our performance reflected a significant increase in capacity, load factor and yield compared to the first quarter. Premium leisure remains strong, while business travel continues a steady recovery in all airlines.”

Gallego said he hoped the chaos at Heathrow - which has seen an embarrassing mountain of passenger luggage build up at Terminal 2 - would be "more stable" before the end of the year.

“I think with the adjustment of capacity that all the airlines have done, we are improving the resilience of operation at the airport. So I hope that if everything goes well, at the end of the year we will be in a better situation.”

Reporting by Frank Prenesti at Sharecast.com