British Airways owner, International Consolidated Airlines Group SA on Thursday said strong and sustained demand for travel, in particular in leisure, helped drive bumper growth in sales and profit in 2023.

Shares in IAG rose 0.9% to 154.16 pence in London on Thursday.

The Madrid-based airline operator which also owns Iberia, Vueling and Aer Lingus said pretax profit in the 12 months ending December multiplied to €3.06 billion from €415 million a year ago.

In the fourth quarter pretax profit leapt 77% to €441 million from €249 million.

Operating profit before exceptional items jumped to €3.51 billion from last year’s €1.28 billion and ahead of €3.25 billion in 2019. The figure was in line with consensus expectations.

Fourth quarter operating profit before exceptional items rose 5.2% to €502 million from €477 million.

Revenue in 2023 increased 28% to €29.45 billion from €23.07 billion and in the fourth quarter by 8.2% to €7.22 billion from €6.39 billion.

Liberum analyst Gerald Khoo said: ‘The 2023 results were in line with our forecasts and consensus at the operating profit level. However, we would highlight that forecasts had been raised steadily over the past year. The significant improvement in profitability reflected the ongoing restoration of capacity, with improvements in both unit revenues and unit costs’.

IAG reported capacity growth in 2023 of 23% compared to 2022, focused on the core North Atlantic and South Atlantic markets.

This took capacity to 95.7% of the levels seen before the Covid-19 pandemic in 2019 capacity, measured in available seat kilometres, with quarter four at 98.6% of 2019.

IAG highlighted a strong performance from its Spanish businesses which delivered €1.4 billion of operating profit, more than doubled from 2022’s €0.6 billion.

The cash-generative, and high-margin IAG Loyalty business grew profits by 17% to £280 million, adding 4.9 million new members during the year.

IAG issued a positive outlook for 2024, highlighting confidence in significant free cash flow generation, disciplined capital allocation and a commitment to sustainable shareholder value creation and cash returns.

Demand continues to be robust, with particular strength in leisure travel.

IAG said it was currently 92% booked for the first quarter of 2024 and 62% booked for the first half, ahead of the position last year.

It plans to grow capacity by around 7% in 2024. In particular British Airways will continue to rebuild to its pre-COVID-19 long-haul capacity and Iberia will seek to grow in the growing Latin American market, IAG said.

Non-fuel unit costs are forecast to increase slightly in 2024.

No dividend was paid, unchanged from 2022.

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