BA owner IAG posts record first-half operating profit

In the six months to 30 June, the company swung to an operating profit before exceptional items of €1.3bn from a loss of €466m in the same period a year earlier. IAG pointed to sustained strong demand across the network, and a particularly strong showing from the Spanish business.

Total revenue rose to €13.6m during the half from €9.4m.

IAG said it had restored 94% of 2019 capacity, measured in available seat kilometres. Passenger unit revenue for the half was 18.4% higher than a year earlier, with a strong leisure traffic recovery and business traffic recovering more slowly. IAG said the premium leisure segment continued to perform very well.

Chief executive Luis Gallego said: "Our strong profits since the start of the year are helping to fund investment for our customers, and to improve our balance sheet by reducing debt. We are aiming to be back to pre-pandemic capacity at the end of this year. 

"These results are thanks to a strong performance from all companies across the group, and we would like to thank our teams for their hard work during the year so far.

"Customer demand remains strong across the group, particularly for leisure travel, with around 80% of passenger revenue for the third quarter already booked. And our airlines have put in place plans to support operations during the busy summer period."

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "Leisure demand is said to be holding up, with bookings for the summer season at healthy levels. Investors should also be celebrating the fact that capacity is almost fully restored to pre-pandemic levels, which gives the airline group the best chance of capitalising on demand.

"At the same time, there are things to monitor. First and foremost is the risk, and cost, of disruption outside the group’s controls. It’s also important to consider that the outlook for business demand is murkier than leisure, and this corner of the market is a lot more important to IAG than it is for the likes of easyJet. As consumer sentiment potentially weakens towards the end of this year, it’s also possible that the likes of BA may see the rate of bookings slow. IAG has done an awful lot to get itself out of a downwards spin, and is now on an even keel, but unfortunately as far as mapping demand goes, it’s not out of the woods."