First quarter profit for the first time since quarter 1, 2019, demonstrating strong performance.
- Operating profit before exceptional items of 9 million euros, up 750 million euros versus quarter1, 2022 and a positive outcome for quarter 1 for the first time since quarter 1, 2019, representing ongoing strong customer demand across all our airlines
- Better than expected1 due to strong yield performance across the Group and the benefit of a lower fuel price
- We continue to focus our capacity deployment on our core Latin America and North Atlantic markets, which are now back at pre-pandemic levels of capacity, as well as growing Vueling’s year-round leisure network
- Encouraging outlook for the summer with around 80% of expected quarter 2 revenue now booked
- We currently expect our full year 2023 operating profit before exceptional items to be higher than the top end of our previous guidance of 1.8 billion euros to 2.3 billion euros.
Luis Gallego, IAG Chief Executive Officer, said: “IAG has delivered a strong first quarter financial performance, as Group airlines recovered capacity to close to pre-pandemic levels. Iberia contributed a record first quarter profit and all our airlines performed above expectations, benefiting from robust demand and a lower fuel price in the quarter. We are seeing healthy forward bookings with leisure demand particularly strong while business travel continues to recover more slowly.
“As we return to more normal operations, we continue to invest in sustainability, including more fuel-efficient aircraft, and in customer experience, updating the business cabins for British Airways and Iberia. Over the past year we have recruited thousands of new employees across the Group and strengthened our operations so that we are ready to deliver for our customers during the summer peak.
“We have the right model to succeed with synergies and efficiencies across the Group and I want to thank all our employees for the role they have played in our continued recovery.”
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- Stronger performance than expected at every airline, supported by more good progress at IAG Loyalty.
- Outperformance mainly driven by leisure demand in both longhaul and shorthaul:
– Aer Lingus is more seasonally exposed than the other airlines, but is seeing good demand to European leisure destinations as well as to the USA and the Caribbean. Shorthaul business seeing some softness, as are technology industry-related routes.
– British Airways returned to profit in quarter 1 for the first time since quarter 1, 2019. We are seeing strong demand from leisure travel to most parts of the network. Corporate travel is recovering slowly. The change in the non-premium mix of seats in the longhaul fleet also has a negative impact on unit revenue.
– Particularly strong demand in Spain and Latin America, as well as on routes to the USA, has delivered Iberia’s best-ever quarter 1 performance and made it one of the world’s most profitable airlines in quarter 1, 2023. Business demand is recovering slightly faster than in other airlines.
– Vueling’s strategy to build winter season capacity to leisure destinations has driven high unit revenue and load factors, which also supports improving, sustainable ancillary revenue.
- IAG Loyalty added 1.2 million newly enrolled customers during the quarter, which is 50% more than in quarter 1, 2019. IAG Loyalty drove good cash flow and operating profit during the quarter of 81 million euros. During the quarter IAG Loyalty launched new products designed to increase engagement, such as Avios-Only Flights.
- Three narrow-bodied aircraft (one Airbus A320neo and two A321neo) were delivered in the quarter, with 29 aircraft still expected in total in 2023. These modern, more fuel-efficient aircraft are a key part of our cost and sustainability initiatives. We continue to manage our fleet deliveries and do not expect supplier challenges to have a material impact on our plans.
Customer demand currently remains strong in all IAG’s airlines and in all regions, particularly for leisure customers. IAG expect capacity to be around 97 per cent of 2019 levels for the full year, as we focus on our core markets. We are mindful of a number of uncertainties that currently face the sector:
- ongoing volatility in the geopolitical and macroeconomic environment can have a significant impact on the price of fuel, our biggest cost, and consumer confidence;
- this early in the year, we have limited visibility of customer bookings for the second half of the year; and
- our business is directly impacted by issues in the external operating environment, such as the strikes currently ongoing at French ATC and Heathrow Airport.
Taking the above into account, together with the quarter 1 performance, we currently expect our full year 2023 operating profit before exceptional items to be higher than the top end of our previous guidance of 1.8 billion euros to 2.3 billion euros. We also expect our net debt at December 31, 2023 to be better than previous guidance of materially flat year on year, and to be down in line with our profit outperformance.
Effective July, Fernando Candela Perez is appointed Chairman and Chief Executive Officer of Iberia until the end of the year. This follows the decision of Javier Sánchez-Prieto to leave the Group to pursue a new professional project outside of aviation. Fernando has more than 30 years’ experience in the aviation industry and has been with IAG for 10 years, including his roles as Chief Transformation Officer, Chief Executive Officer of LEVEL and Chief Executive Officer of Iberia Express.
1 IAG expected a quarter 1 operating loss before exceptional items of around €200 million, as stated at the 2022 results release on February 24, 2023.
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