BA owner returns to profit as travel bounces back from Covid

British Airways’ owner bounced back to a €1.25bn (£1.1bn) profit in 2022 and said the figure could almost double in the year ahead as leisure and business travel recovers further from the coronavirus pandemic.

International Airlines Group (IAG), which ran up losses of almost €11bn through 2020 and 2021 as Covid crippled the aviation industry, said revenues almost tripled to €23bn last year as the lifting of restrictions fuelled a holiday and travel boom.

“2022 was a year of strong recovery, driven by sustained leisure demand and markets reopening,” said Luis Gallego, the chief executive of IAG, which also owns airlines including the Spanish carrier Iberia. “At this point of the year we continue to see robust forward bookings, while also remaining conscious of global macroeconomic uncertainties. We are transforming our businesses, with the intention of returning IAG to pre-Covid levels of profit within the next few years.”

The company, which also announced a €400m deal to acquire the 80% of Air Europa it did not already own, said that it is forecasting operating profits of between €1.8bn and €2.3bn this year.

“However, we are mindful of uncertainty in the macro environment and fuel and non-fuel cost inflation,” it said.

IAG said capacity hit 78% of pre-Covid levels last year – hitting 87% of 2019 levels in the final quarter – with a strong recovery in the holiday market, while business-related travel is “steadily improving”.

However, with the Russia-Ukraine war driving oil prices higher, the company said aviation fuel unit prices are up 30% compared with 2019, with costs rising from €1.78bn to €6.1bn year on year.

Headline inflation rates at 40-year highs have also pushed non-fuel unit costs in the business up a quarter compared with pre-Covid levels. Employee costs jumped from €3bn to €4.6bn year on year, while handling, catering and other operating costs more than doubled from €1.3bn to €2.97bn.

Total costs for IAG almost doubled from €11.2bn to €21.8bn between 2021 and 2022.

Despite soaring costs, Gallego said the airline group remained confident in returning to pre-Covid-19 levels of operating profit within the next few years.