International Consolidated Airlines Group SA on Friday hailed a ‘record third-quarter performance’ that provided money for investment and debt reduction.

The Madrid-based owner of British Airways, Iberia, Vueling and Aer Lingus reported pretax profit of €1.58 billion in the three months that ended September 30, up 56% from €1.01 billion a year before. This put nine-month profit at €2.62 billion, up from just €166 million in 2022.

Total revenue in the third quarter was €8.65 billion, up 18% from €7.33 billion. In the nine months, it was €22.23 billion, up 33% from €16.68 billion.

Within those total figures, passenger and other revenue were up strongly, but cargo was down sharply, by 30% in the third quarter and 29% so far in 2023. IAG said ‘industry supply continues to exceed reducing demand for air freight’. However, cargo only accounts for about 3% of total revenue.

IAG said it increased passenger capacity by 18% on a year before, putting third-quarter capacity at 95.6% of its pre-Covid level in 2019. The airline group said it expects full-year capacity to be around 96% of its pre-pandemic level.

Amid the rising passenger revenue, costs were down, with fuel unit costs down 6.2% and non-fuel unit costs down 3.5%.

IAG said the reduction in non-fuel unit costs was despite a one-percentage-point knock from flight disruption, including the UK air traffic control system outage in August that particularly hurt British Airways. It expects non-fuel unit costs for all of 2023 to be at the lower end of the previously guided 6% to 10% improvement, due to the disruptions.

IAG was able to pay down its borrowings to €17.23 billion as of September 30 from €19.98 billion a year before. It also took delivery of 20 new aircraft during the recent nine months.

Looking ahead, IAG said customer bookings for the fourth quarter are as expected, with 75% of expected revenue already booked.

‘We expect 2023 to be a year of strong recovery in our margins, operating profit and balance sheet and towards pre-Covid-19 levels of capacity,’ the company said.

IAG shares were down 1.4% at 140.90 pence early Friday in London. The stock is up 17% over the past 12 months.

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