London: British Airways parent IAG reported a second-quarter profit and said it expects to post positive earnings for the full year as a rebound in travel led by premium leisure bookings more than makes up for capacity curbs tied to the industry’s staffing crisis.
IAG had an operating profit of 287 million euros ($293 million) in the three months, ahead of analyst estimates, according to a statement Friday. Earnings are building further in the current quarter, while net cash flow should be “significantly” positive for the year.
“We returned to profit for the first time since the start of the pandemic following a strong recovery in demand across all our airlines,” CEO Luis Gallego said in the release. “Forward bookings show sustained strength and North Atlantic demand continues to grow.”
BA scrapped 13 per cent of its schedule from April through October as the dismissal of 10,000 workers during the coronavirus pandemic leaves it struggling for staff as demand rebounds. Still, ticket prices have surged against the background of strong pent up demand and limited capacity, helping to make up for lost revenue from the scrapped flights.
Shares of IAG gained 3.3 per cent in London, where the company is based, before trading 2 per cent higher as of 8:10 a.m.
Premium leisure sales had almost full recovered to 2019’s level by the end of the second quarter, despite capacity being lower, while business-channel revenue was 60 per cent back. Fares have been exceptionally strong across all segments, Gallego said on a media call, citing domestic flights in Spain and routes to Latin America where demand has outstripped the pre-Covid norm in recent weeks.
More stable
Caps on passenger numbers at London Heathrow will limit capacity to 80 per cent of 2019 levels over the summer and 85 per cent in the fourth quarter, a reduction of 5 per cent for the second-half of the year compared to previous guidance. Gallego said Heathrow is now performing in line with other hubs and that he expects operations to be much more stable by the end of the year.
IAG rival Air France-KLM also reported better-than-expected earnings Friday, with net income of 324 million euros, its first positive result since the end of 2019.
Like BA, the Franco-Dutch group has been forced to dial back its ambitions for the summer peak, operating 80 per cent to 85 per cent of pre-pandemic flight volumes, a drop from the up to 90 per cent forecast in May. It plans to raise capacity closer to pre-pandemic levels by the end of the year.
British Airways said earlier this month it was hiring KLM’s chief operating officer to help improve operational resilience and accelerate hiring. The UK flag carrier has hired 4,000 people this year, Gallego said, 80 per cent of whom are already in operational roles.
