IAG reports record third-quarter results

International Airlines Group (IAG) has reported record profit and high margins in the third quarter of 2023, driven by very strong leisure demand across all its airlines. The Group reported strong growth of operating profit before exceptional items in the quarter of €1,745 million (Q3 2022: €1,216 million) and an operating margin of 20.2%
(Q3 2022: 16.6%).

Aer Lingus total revenue increased by 16% driving strong profit growth and operating margins of 25.5%, despite cost headwinds. Capacity increased by 15% across both long-haul and short-haul over the summer.

British Airways total revenue grew by 20% in the quarter, on capacity growth of 25%, in particular through strong leisure demand. Profits increased by 50% year-on-year as capacity increases drove strong non-fuel unit cost performance (-7.6%), despite disruption costs. Operating profit was £617 million and the operating margin was 15.3%. Capacity growth focused on increased frequencies and higher gauge aircraft, as well as rebuilding the Asian network.

Strong trading across the network at Iberia has driven an increase in total revenue of 19%, with capacity growth of 18% and passenger unit revenue growth of 5%, with leisure continuing to be strong and corporate travel mainly recovered to pre-COVID levels. Profit increased by 76% to €449 million and margins to 23.1%.

Vueling delivered a record operating profit (€282 million) and margin for the quarter of 26.1%. Transformation initiatives are driving strong performance across all areas: higher load factors at 94% and ancillary revenue of €29 per passenger.

Loyalty continued to drive good revenue growth in Q3 2023 as total revenue increased by 57%. The quarter was the highest ever for Avios issued and redeemed by customers, as well as a record quarter were 1.3 million customers joined IAG programmes. This was supported by the continuing roll-out of programme enhancements, including a further tranche of “Avios-only” flights for summer 2024.

IAG's Cargo business continues to see declines in revenue and profit as industry supply continues to exceed reducing demand for air freight. Cargo yields remain above 2019 levels.

The Group's balance sheet continues to strengthen as the business returns to normal levels of profitability. Net debt has reduced by €3.1 billion year-on-year to €8.0 billion (September 30, 2022: €11.1 billion) and leverage was 1.4-times as at September 30, 2023 (September 30, 2022: 4.4x). (£1.00 = €1.15 at time of publication)