International Consolidated Airlines Group on Friday narrowed its first quarter loss as the British Airways parent expects to turn a profit starting in the current quarter due to rising travel demand.
For the three months ended March 31, pretax loss narrowed to €916 million from €1.22 billion in the first quarter last year, as total revenue more than tripled to €3.44 billion from €968 million.
The load factor, measuring how many seats are filled, stood at 72%, up from 46% a year ago. While the first quarter of 2022 saw the highest load factor since the start of the pandemic, this was still 8.5 percentage points short of the first quarter of 2019, when capacity was 81%.
The number of passengers in the quarter surged to 14.4 million from 2.6 million a year ago. IAG said it flew 65% of 2019 capacity in the first quarter. It expects to raise this to 80% in the second quarter, 85% in the third quarter and 90% in the fourth.
IAG - which also owns Iberia and Aer Lingus - said travel was particularly boosted by the premium leisure sector, being its ‘strongest performing segment’. What’s more, ‘business travel is at its highest level since the start of the pandemic’.
‘Demand is recovering strongly in line with our previous expectations,’ the company added, as it expects to turn profitable in the current quarter and for the full year.
IAG said the continued easing of government-imposed travel restrictions, particularly in the UK, resulted in improved travel demand, with no noticeable hit from the war in Ukraine.
IAG shares were 9.4% lower at 129.84 pence each in London on Friday morning.
‘A moderation of expansion plans in light of staff shortages, following the issues caused by cancellations more recently, won’t be very well received,’ commented Sophie Lund-Yate, lead equity analyst at Hargreaves Lansdown, adding: ‘At the moment, IAG is in the sticky point of trying to massively ramp up capacity, but planes aren’t quite full enough, or frequent enough, which means the costs associated with getting things going again are stifling profits.’
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