- Record first half operating profit before exceptional items of 1,260 million euros (first half 2022: 446 million euros loss), an increase of 1,706 million euros, with sustained strong demand across our network and particular outperformance from our Spanish businesses
- 2nd Quarter 2023 operating profit before exceptional items of 1,251 million euros (quarter 2 2022: 295 million euros), including a record operating profit before exceptional items for any quarter at Iberia of 307 million euros
- Net debt has reduced to 7.6 billion euros at June 30, 2023 (December 31, 2022: 10.4 billion euros) due to the increase in profit and seasonal working capital inflows; net debt to EBITDA before exceptional items of 1.5 times (2022: 3.1 times)
- We are particularly focused on delivering resilient operations over the summer, reflecting a challenging operating environment in the UK and parts of Europe
- Encouraging outlook for the summer with around 80% of expected 3rd quarter revenue now booked
- IAG is well-positioned to benefit from its attractive customer base and strong network in large and growing markets.
Luis Gallego, International Airlines Group’s CEO, said: “Our strong profits since the start of the year are helping to fund investment for our customers, and to improve our balance sheet by reducing debt. We are aiming to be back to pre-pandemic capacity at the end of this year. These results are thanks to a strong performance from all companies across the Group, and we would like to thank our teams for their hard work during the year so far.
“Customer demand remains strong across the Group, particularly for leisure travel, with around 80% of passenger revenue for the third quarter already booked. And our airlines have put in place plans to support operations during the busy summer period.”
Financial highlights for first half of 2023
- Restored 94% of 2019 capacity, measured in available seat kilometres (ASKs)
- Passenger unit revenue for the first six months was 18.4% higher than the same period in 2022, with strong leisure traffic recovery and business traffic recovering more slowly. The premium leisure segment continued to perform very well.
- Non-fuel unit costs reduced by 7.3% versus the first six months of 2022, driven by a passenger capacity increase of 30.9% and transformation initiatives, net of supplier cost increases, mainly linked to inflation.
- Fuel unit cost was up 5.7% versus 2022, linked to higher effective average fuel prices net of hedging in the first six months of 2023 versus 2022 and the benefits of IAG’s more efficient aircraft deliveries over the last few years
- Operating margin before exceptional items was 9.3% for the first half and 16.3% for the second quarter
- Profit after tax for the first six months of 2023 of 921 million euros (first six months of 2022: loss after tax of 654 million euros)
- Customer demand remains strong across the Group, particularly for leisure customers, with around 80% of the third quarter’s passenger revenue already booked
- We expect full year 2023 capacity to be around 97% of pre-COVID-19 levels, subject to disruption
- Whilst there is no sign of weakness in forward bookings, we continue to be mindful of wider uncertainties that might affect the full year. This includes the potential impact of geopolitical and macroeconomic volatility on the price of fuel and consumer confidence, as well as the impact of external factors on the operating environment, such as strikes. Our Cargo business continues to be impacted by a weak market
- We are currently c.30% booked for the fourth quarter, which is typical for this time of year
- We continue to expect non-fuel unit costs for the year to be in the range of 6% to 10% better compared to full year 2022
- We expect to generate sustainable free cash flow this year and for our net debt at December 31, 2023 to reduce compared to December 31, 2022, in line with our profit outperformance
Capacity and passenger traffic
The Group continued to restore its passenger capacity, following the significant reductions due to COVID-19, with passenger capacity now close to pre-pandemic levels. In the first six months of 2023, IAG capacity, measured in available seat kilometres (ASKs), was 30.9 per cent higher than in the first six months of 2022, which was impacted by the Omicron variant of COVID-19, particularly in January and February. Passenger capacity was only 5.7 per cent lower than in the first six months of 2019. Passenger load factor for the six months was 84.1 per cent, up 6.3 points on the previous year and 1.1 points higher than in the first six months of 2019 (quarter 1: 0.8 points higher, quarter 2: 1.4 points higher).
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Author: Vicky Karantzavelou