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IAG: Quarter 1 saw strong business travel recovery, with premium leisure remaining strong

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Passenger capacity in quarter 1 was 65% of 2019 capacity, up from 58% in quarter 4, 2021, as the Group’s airlines continued to restore capacity in advance of the Summer flying programme.

International Consolidated Airlines Group (IAG) presented Group consolidated results for the three months to March 31, 2022. Strong customer demand is expected to drive profitability from quarter 2 onwards.

Passenger capacity in quarter 1 was 65% of 2019 capacity, up from 58% in quarter 4, 2021, as the Group’s airlines continued to restore capacity in advance of the Summer flying programme.

The continued easing of government-imposed travel restrictions, particularly in the UK, resulted in improved travel demand, with no noticeable impact from the war in Ukraine.

Quarter 1 saw strong business travel recovery, with premium leisure remaining strong. The impact of Omicron had a negative short-term impact in January and February on the operating result, passenger bookings and cancellations

Following the recent lifting of travel restrictions and the steep ramp up in capacity, British Airways is focusing on improving operations and customer experience, including moderating planned capacity at Heathrow.

Current passenger capacity plans for remainder of 2022 are for around 80% of 2019 capacity in quarter 2, 85% in quarter 3 and 90% in quarter 4, resulting in full-year capacity of around 80% of 2019, with North Atlantic close to full capacity by quarter 3 IAG results for the period:

  • Operating loss for the first quarter 731 million euros (2021 restated1: operating loss 1,077 million euros), and operating loss before exceptional items 754 million euros (2021 restated1: operating loss before exceptional items 1,144 million euros)
  • Loss after tax and exceptional items for the first quarter 787 million euros (2021 restated1: loss 1,074 million euros) and loss after tax before exceptional items 810 million euros (2021 restated1: loss 1,131 million euros)
  • Cash was 8,184 million euros at March 31, 2022, up 241 million euros on December 31, 2021, with significantly positive working capital, driven by bookings for the remainder of the year
  • Cash was impacted by the timing of aircraft financing versus deliveries, with financing for five Iberia aircraft that were delivered and paid for in quarter 1 to be drawn down in quarter 2
  • Committed and undrawn general and aircraft financing facilities increased to 4,176 million euros (December 31, 2021: 4,043 million euros), including an additional 200 million euros loan facility for Aer Lingus from the Ireland Strategic Investment Fund (ISIF), bringing total liquidity to 12,360 million euros (December 31, 2021: 11,986 million euros)

Luis Gallego, IAG Chief Executive Officer, said: “Demand is recovering strongly in line with our previous expectations. We expect to be profitable from the second quarter onwards and for the full year. Premium leisure continues to be the strongest performing segment and business travel is at its highest level since the start of the pandemic.

As a result of the increasing demand, forward bookings remain encouraging. We expect to achieve 80% of 2019 capacity in the second quarter and 85% in the third quarter. North Atlantic capacity will be close to fully restored in the third quarter.

The Group’s operating loss reduced significantly in the first quarter compared to last year, with our losses reflecting normal seasonality, the impact of Omicron and costs associated with ramping up operations.

Globally the travel industry is facing challenges as a result of the biggest scaling up in operations in history and British Airways is no exception. The welcome removal of UK’s stringent travel restrictions, combined with strong pent-up demand, have contributed to a steep ramp up in capacity. The airline’s focus at the moment is on improving operations and customer experience and enhancing operational resilience.

“We’re proud that our leadership in tackling climate change continues to be recognised at a global level. The Transition Pathway Initiative (TPI) has awarded us its highest ranking for carbon performance. It rated IAG in the top 3% of almost 500 businesses for its alignment to scientific targets.”

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