British Airways' parent company returns to profit in first half of 2023

IAG aims to be back to pre-pandemic capacity by the end of 2023

The parent company of British Airways and Iberia expects a strong recovery in leisure travel. PA

IAG, the parent company of British Airways and Spanish airline Iberia, has reported a record operating profit for the first half of 2023.

This marks a turnaround in performance after the Covid-19 pandemic caused significant losses in the aviation sector last year.

IAG's operating profit soared to a record €1.3 billion (£1.1 billion) for the period between January and June 2023, rebounding from a loss of €446 million during the same period in the previous year.

In addition, IAG's revenue rose to €13.6 billion, representing an annual growth of about 45 per cent.

The group's profitability beat analyst forecasts by 40 per cent, signalling a stronger than expected recovery.

One of the main factors driving the recovery has been a strong resurgence in leisure travel.

IAG highlighted that capacity for flights had been restored to 94 per cent of pre-pandemic levels.

The premium leisure segment was also noted in the report for its exceptional performance.

“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,” said IAG chief executive Luis Gallego.

“We are aiming to be back to pre-pandemic capacity at the end of this year.”

Mr Gallego said the positive results were due to the high performance of all companies across the group.

“Customer demand remains strong across the group, particularly for leisure travel, with around 80 per cent of passenger revenue for the third quarter already booked,” he said.

The group’s after-tax profit for the first half stood at €921 million, indicating a strong rebound from the net loss of €654 million one year earlier.

Despite these successes, IAG remains cautious and committed to making operations more resilient over the summer, amid air traffic control challenges and labour disputes in Europe.

While no update was provided on the group's profit guidance, which it lifted in May, it is clear that the focus for IAG is to consolidate this period of recovery and build on its strong ticket sales, which are expected to drive annual profit above the top end of the €1.8 billion to €2.3 billion range given in February.