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In the first nine months of 2023, British Airways earned a profit of approximately £50 per second. However, the parent company of the airline, IAG, cautioned about a variety of potential risks in the coming months and years.
In the first nine months of 2023, British Airways generated a profit of £1.15 billion, which was £215 million less than the same period in 2019.
IAG reported that the months of July to September were notably profitable. According to their statement, British Airways experienced a 20% increase in total revenue during this quarter, with a 25% growth in capacity, driven by high demand for leisure travel.
British Airways’ capacity is currently 10% lower than it was in 2019. IAG stated that the increase in capacity for British Airways has been less than that of other operating companies, as the retirement of their Boeing 747-400 fleet and slower recovery of capacity in the Asia Pacific region have impacted their response to the Covid-19 pandemic.
The results would have been improved if not for “an increase in disturbances throughout the company, specifically the UK Nats systems outage in August”. The malfunction of the UK air traffic control (ATC) system for multiple hours on August 28 led to the cancellation of over 1,500 flights across all airlines.
According to The Independent, British Airways incurred a cost of £12m due to disruptions, which is slightly lower than its two main budget competitors, easyJet and Ryanair.
IAG cautioned about vulnerabilities in airport resilience, specifically at London Heathrow, as well as potential disruptions from air traffic control restrictions and strikes.
The company stated that there are various risks, such as the availability of planes and parts, that they are concerned about. They specifically mentioned that the supply chain in the aviation industry is not very resilient, which makes it difficult to obtain aircrafts, engines, and components.
“Delays in the delivery of new aircraft and availability of spare engines are still affecting operations and causing longer turnaround times for aircraft.”
There are other potential dangers, such as the effects of inflation on consumer demand and trust. According to the statement from IAG: “As interest rates rise and significantly affect customers’ personal debt, they may have to cut back on travel expenses to adjust to the higher cost of borrowing.”
IAG cautioned about the potential consequences of increasing geopolitical tensions and ongoing conflicts in different areas, particularly the Middle East.
In general, IAG stated: “We anticipate a robust rebound in our margins, operating profit, and balance sheet in 2023, reaching pre-Covid-19 levels of capacity.”
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