IAG becomes latest airline group to signal recovery from pandemic

The owner of British Airways expects to return to profit this quarter as the travel industry recovers from the worst impact of the coronavirus pandemic and airlines rush to scale up operations to meet demand for flying.

International Airlines Group, the owner of carriers including British Airways, Aer Lingus and Iberia, on Friday welcomed the “strong” return of business travel, which has hit its highest levels since the start of the pandemic. There was “no noticeable impact” from the war in Ukraine on bookings, it said.

The company said it expected to report an operating profit in the second quarter and for the full year, which would put two years and more than €10bn of losses behind it.

“Demand is recovering strongly,” said Luis Gallego, IAG’s chief executive.

The aviation industry has struggled to restart operations and BA has been forced to cancel hundreds of flights and thin out its schedules until June as it faces staff shortages.

Gallego blamed “global” challenges, but said BA’s focus was on “improving operations and customer experience and enhancing operational resilience”.

IAG on Friday slightly slowed its recovery plans because of its operational problems.

It now plans to increase its schedules to 80 per cent of pre-pandemic levels this year, down from the 85 per cent guided in February, including restoring almost all its normal capacity on transatlantic routes this summer.

“This downgrade is mainly driven by a slower capacity ramp up at Heathrow to manage operational issues at the airport better,” said Alex Irving, an analyst at Bernstein.

The airline group reported an operating loss after tax and exceptional items of €787mn in the first quarter, down from a €1.1bn loss the year previously. Revenue rose to €3.4bn from €968mn, and cash rose slightly to €8.2bn.

IAG shares fell 5 per cent in early London trading on Friday after the company reported a wider loss than analysts had forecast. The group’s shares have shed about a third of their value over the past 12 months.

The losses reflected weak winter demand, the impact of the Omicron coronavirus variant and costs of resuming operations, Gallego said.

IAG became the third of Europe’s network airlines, which run a mix of short and long-haul flights, to point to a strong summer following similar buoyant updates from Air France-KLM and Lufthansa this week.

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