International Consolidated Airlines Group SA on Friday said it will return its flying capacity back to the level seen before the Covid-19 by the end of 2023, as it reported a dramatic swing to profit in the first half of the year.

Shares were up 2.2% to 158.35 pence early Friday in London.

IAG has its headquarters at Heathrow Airport in London and its registered office in Madrid. It operates British Airways, Iberia, Aer Lingus, Level and Vueling, with about 558 aircraft in total.

The company swung to a pretax profit of €1.04 billion in the six months that ended June 30 from a loss of €843 million a year before, on €13.58 billion in revenue, up 45% from €9.35 billion.

All of that profit came in the most recent three months, as January, February and March are seasonally weak for airlines. In the second quarter, IAG recorded pretax profit of €1.16 billion, up from just €73 million a year before.

Operating profit was €1.25 billion in the second quarter, up from €201 million a year ago. IAG said it had an operating margin before exceptional items of 16.3% in the second quarter and 9.3% for the first half as a whole.

IAG declared no interim dividend, unchanged from a year before. It last paid a dividend, of 17.0 euro cents, in 2019.

The pandemic left the airline operator with heavy debt. However, it is reducing this. Net debt was €7.6 billion on June 30, down from €10.4 billion on December 31.

Looking ahead, IAG said 80% of third-quarter revenue and 30% of fourth-quarter revenue has been booked.

‘Our strong profits since the start of the year are helping to fund investment for our customers, and to improve our balance sheet by reducing debt,’ said Chief Executive Officer Luis Gallego. ‘We are aiming to be back to pre-pandemic capacity at the end of this year.’

IAG also on Friday said it has converted into firm orders options for six 787-10 aircraft from Boeing Co and one A350-900 from Airbus SE. The jets will be delivered in 2025 and 2026 and used for long-haul flights by British Airways and Iberia.

IAG also has added six further Boeing 787-10 options to its order book.

IAG noted a 787-10 has a list price of $428.5 million and an A350-900 lists at $317.4 million, but it said it ‘has negotiated substantial discounts from the list prices’.

The fuel-efficient aircraft will contribute toward restoring capacity to pre-pandemic levels, IAG said, and toward its goal of net-zero carbon emissions by 2050.

IAG also said it is working on securing regulatory approvals for its acquisition of Air Europe, which it still expects to take 18 to 24 months from the time of the announcement back in February.

Iberia had agreed to buy Air Europa in late 2019 for €1 billion, but the price was slashed to €500 million after the Covid-19 pandemic grounded the entire travel sector.

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