IAG obtained a profit of 921 million euros in the first half of the year, which not only definitively left behind the losses of 654 million in the same period of the previous year, but also achieved its highest profits to date. The record was accompanied by that of Iberia, which contributed 307 million.
The good result is mainly due to the increase in leisure and tourism trips, which contrast with the slow recovery of business trips, which places Iberia and Vueling at the forefront of the recovery. The first already has a capacity of 102% compared to pre-pandemic levels and the second, 109%, ahead of the group average, which stands at 94%.
IAG, which does not plan to add more aircraft to Iberia and Vueling for now due to its “better use”, entered 13,583 million euros in the first half, 45% more, thanks, among other things, to the improvement in occupancy. It spent 3,550 million on fuel, 38% more, after which operating profit was 1,260 million, compared to losses of 446 million a year earlier.
In operational terms, Iberia and Vueling performed well, although the airline that made the difference was British Airways, with a profit of 602 million, compared to losses of 436 million a year earlier.
In operating terms, Iberia’s profit was 372 million, compared to just 2 million in the first half of 2022, and was accompanied by a strong progression of Vueling, which went from operating losses of 58 million to profits of 96 million.
The debt of the group as a whole is going down after the efforts during the pandemic. It has gone from 10,385 million to 7,613 million, and the challenges now involve reinforcing fleets such as British Airways with Boeing aircraft and completing the purchase of Air Europa.
“We remain focused on obtaining the necessary approvals for our acquisition of Air Europa,” says the group led by Luis Gallego. However, he expects the permits will not arrive for 18-24 months after the operation was announced in February. In other words, the purchase of Air Europa by Iberia will not take place until mid-2024.
To give some visibility, IAG starts from a scenario in which the approvals will arrive before July 31, 2024, at which time it will have cash outflows of 150 million euros for the purchase, which will go to Globalia. On the first and second anniversary of the closing of the operation, it will pay, in each of them, another 100 million.
The February agreement will allow it to acquire 80% of the capital of Air Europa that it did not control. IAG needs to close the purchase within 24 months if it does not want to be forced to pay 50 million to Globalia, as contemplated in the agreement.
When describing the general progress of the business, IAG highlights the “strong sustained demand throughout the network and a particularly positive performance of business in Spain”, which has now become one of the most virtuous countries thanks to tourism.
Fuel prices remain a challenge for the company, which is “particularly focused on ensuring the resilience of operations over the summer” in a “difficult” operating environment in the UK.
However, its prospects for the summer and fall are “encouraging”, as bookings already cover around 80% of forecast third-quarter revenue. “IAG is well positioned to benefit from its attractive client base and strong network in large and growing markets,” he says.
Luis Gallego, the CEO of IAG, assures that the objective of the group as a whole is “to return to the capacity prior to the pandemic at the end of this year.” The airlines, he assures him, have launched plans to strengthen operations during the summer season.
