LONDON- International Airlines Group (IAG) Group, British Airways (BA) parent company, stated that they have finalized the deal for six new Boeing 787-10. Furthermore, in the first half of 2023, the company reports confirmed that they converted the optional 10 Airbus A320neo orders into firm ones.
In the first half, the operating profit before exceptional items reached a record €1,260 million (compared to a loss of €446 million in the H1 of 2022). Subsequently, marking an impressive increase of €1,706 million.
This surge was attributed to the continued robust demand observed across the IAG network.
IAG Group H1 Results
In the first six months, 94% of the 2019 capacity was restored, as measured by available seat kilometers (ASKs).
Passenger unit revenue for the same period showed a notable increase of 18.4% compared to 2022. Primarily due to a strong leisure traffic recovery, business traffic saw a slower rebound. Further, the premium leisure segment continued to perform exceptionally well.
Non-fuel unit costs decreased by 7.3% compared to the first six months of 2022. This reduction was driven by a passenger capacity increase of 30.9% and the implementation of transformation initiatives, which offset supplier cost increases primarily linked to inflation.
Fuel unit cost experienced a rise of 5.7% compared to 2022, attributed to higher effective average fuel prices net of hedging in the first half of 2023 compared to the same period in 2022.
Additionally, the benefits of IAG’s more efficient aircraft deliveries over the past years contributed to this increase.
The operating margin before exceptional items stood at 9.3% for the first half and 16.3% for the second quarter.
Profit after tax for the first six months of 2023 amounted to €921 million. Thereupon showing a significant turnaround from the loss after tax of €654 million reported during the same period in 2022.
Strengthening its Network
The IAG Group is strategically focusing on restoring capacity in its most robust markets, tailoring efforts to individual airlines within the group:
- Aer Lingus aims to strengthen its presence in the US markets, including targeting new cities like Cleveland and reopening previous destinations such as Hartford. Additionally, it plans to consolidate its base in Manchester.
- British Airways continues its focus on the traditionally strong North Atlantic markets and is gradually reopening key Asian routes.
- Iberia is adjusting its capacity from Madrid to meet the high demand observed in both the South and North Atlantic regions.
- Vueling is dedicated to reinforcing its position in core European markets and bases constrained by limited slots.
The group is experiencing strong demand for its appealing network and frequencies, resulting in robust yields. For Aer Lingus, this demand is driven by the US markets and the recovery of short-haul European leisure destinations.
British Airways is witnessing robust leisure demand across all cabins, while corporate travel remains lower.
Due to exceptionally high demand, Iberia is achieving strong revenue performance across its network. Vueling’s strategy of catering to high leisure demand is leading to significant growth in ancillary revenue.
British Airways Orders 6 Boeing 787-10 and Fleet Update
IAG Group is prudently restoring capacity while placing emphasis on reinstating British Airways’ widebody capacity and seizing strategic opportunities for Iberia (IB).
In the first half of 2023, IAG received 11 new aircraft deliveries, benefiting British Airways, Iberia, and Vueling.
The group anticipates a total of 30 aircraft to be delivered in 2023, including an additional leased aircraft for LEVEL. This includes 11 widebodies (six for British Airways, four for Iberia, and one for LEVEL) and 19 narrowbodies across all airlines.
At present, 43% (243 aircraft) of its long-haul and short-haul fleet comprises more efficient and quieter next-generation aircraft. Improved aircraft utilization at Iberia and Vueling allows for capacity growth without the need for new aircraft acquisitions.
British Airways is projected to return to pre-pandemic levels of non-premium capacity by 2024. Subsequently, long-haul capacity by 2025 and premium capacity by 2026.
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In line with IAG group’s commercial and sustainability objectives, they are continually procuring more efficient and eco-friendly aircraft. This includes converting 10 A320neo options to firm deliveries from 2028, intended as replacements for short-haul networks.
Furthermore, a new order has been placed for six Boeing 787-10 aircraft, scheduled for delivery to British Airways in 2025 and 2026. Further, to expedite the recovery of its premium widebody capacity. Additionally, one Airbus A350-900 aircraft has been ordered for Iberia.
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