British Airways summer profits surge 50% despite air traffic control outage

International Airlines Group achieved a record summer despite the August bank holiday air traffic control outage affecting UK arm British Airways.

BA’s quarterly operating profits surged by 50% to £617 million as revenue grew by 20% in the quarter, on capacity growth of 25%.

IAG reported an operating profit of €1.745 million, up from €1.216 million in the equivalent third quarter last year with an improved operating margin of 20.2%.

IAG’s overall summer performance was driven by “continued strong” leisure travel demand as the group placed a focus on European holiday destinations and further investment across the South and North Atlantic, supported by 20 aircraft deliveries in the year to date.

The group said: “Non-fuel unit costs for the quarter were 3.5% below Q3 2022. This was despite a one percentage point impact from higher disruption across the business, including the UK Nats (National Air Traffic Service) systems outage in August. The majority of these additional costs were in British Airways.”

The company, which also owns Aer Lingus, Iberia and Vueling, saw capacity rise year-on-year by almost 18% over the summer three months to September 30 to 95.6% of equivalent pre-pandemic 2019 levels. Passenger revenue increased by 2.2% year-on-year or 24.6% over 2019.

BA’s capacity growth was focused on increased frequencies and larger aircraft, as well as rebuilding  its Asian network. 

BA last week announced the resumption of flights to Abu Dhabi in 2024 but Heathrow flights to and from Tel Aviv have now been suspended until November 14.

IAG said there would be further investment in stabilising BA’s operations “despite a challenging external environment and supply chain constraints” with “a more resilient performance expected over the winter”.

The overall group expects full year 2023 capacity to be around 96% of pre-Covid-19 levels.

“Overall customer bookings for Q4 are as expected with around 75% of the fourth quarter’s passenger revenue already booked,” IAG said. “Whilst we maintain good forward bookings, we continue to be mindful of wider macroeconomic and geopolitical uncertainties that might affect the remainder of this year.”

IAG chief executive Luis Gallego said: “This quarter represents a record third quarter performance for IAG. This is allowing us to invest in the business and reduce a significant amount of our debt.

“During the third quarter we saw sustained strong demand across all our routes, in particular the North and South Atlantic and in all leisure destinations around Europe. 

“We continue to develop our hubs of Barcelona, Dublin, London and Madrid, supported by our fleet deliveries and future orders.

“Our strong financial performance is enabling investment in our people and allowing us to further improve customer experience. At the same time, we will keep working towards our sustainability goals.”

Meanwhile, BA has completed the final phase of its lounge refresh, located at Heathrow Terminal 5’s B gates, with a range of improvements.

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