British Airways owner IAG said on Thursday it had more than doubled its operating profit last year and gave a positive outlook for 2024 on the back of sustained travel demand.
European airlines have so far reported strong summer forward bookings as they benefit from a continuing post-pandemic travel boom, but concerns over high jet fuel prices and geopolitical uncertainty have weighed on their outlooks.
“In 2023 IAG more than doubled its operating margin and profit compared to 2022, generated excellent free cash flow and strengthened its balance sheet position,” IAG CEO Luis Gallego said in a statement.
Gallego said that the Middle East conflict had impacted mostly corporate demand in the last quarter of 2023 and the first quarter of 2024, but was expected to recover.
Unlike other airlines, IAG said it was not concerned over capacity for the year to come and was not expecting delays in Boeing deliveries this year.
Gallego said that if the certification of Boeing’s 737 MAX 10 is slowed down, they can convert to other variants.
The US planemaker is mired in a regulatory audit and has been prohibited from ramping up 737 MAX production since the Jan. 5 mid-air panel blowout of a new Alaska Airlines MAX 9, with airlines like Ryanair I> saying they expect delivery delays.
The Dublin-based airline is the first in Europe to warn of disruption due a deepening crisis at Boeing, which has been mired in a regulatory audit and has been prohibited from ramping up 737 MAX production since the Jan. 5 mid-air panel blowout of a new Alaska Airlines MAX 9.
“For the time being we aren’t worried. We are sure they’ll fix the situation,” Gallego told a press call.
IAG’s full-year operating profit was 3.5 billion euros ( USD 3.8 billion), up from 1.22 billion euros in 2022, while its debt, which has been a concern to investors and has weighed on its shares, fell to 9.2 billion euros from 10.4 billion euros.
The group, which also owns Iberia, said it would continue investing in BA in particular as part of its growth strategy and that it would aim to improve its website and customer service.
“IAG is also hoping to boost efficiency by reducing disruption. These are all great targets, but the pace of delivery is far from guaranteed. It’s crucial that BA gets this right,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
