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International Airlines Group (IAG), the parent company of British Airways, recently announced their highest ever annual profits due to a surge in travel demand. This was partly fueled by an increase in leisure travelers selecting premium economy and business class seats.
In 2023, the overall operating profits for the group, which comprises of Iberia, Vueling, and Aer Lingus, increased by over two times to £3 billion. This is higher than its previous highest point before the pandemic in 2019.
The CEO, Luis Gallego, dismissed the effects of the UK recession on consumer demand, stating that it “remains robust, especially in the leisure sector.”
He stated that there are no apparent flaws in the market.
The group acknowledged that BA had a low success rate at its London Heathrow headquarters in 2023, with only 60% of flights departing or arriving within 15 minutes of their scheduled time.
According to IAG’s results presentation, substantial efforts have been made to enhance performance, and initial measures are beginning to yield positive results.
According to the statement, business trips have been gradually recovering while the decrease has been compensated by leisure travelers reserving first-class seats.
Capacity in the last three months of 2023 reached 98.6% of pre-pandemic levels in 2019, while full-year capacity was at 95.7% of pre-pandemic levels. The company anticipates a 7% increase in overall capacity for the year 2024.
According to Mr. Gallego, in the year 2023, IAG witnessed a significant increase in both its operating margin and profits in comparison to 2022. This was achieved by restoring capacity to almost pre-Covid 19 levels in the majority of its main markets.
IAG owns British Airways, Iberia, Vueling and Aer Lingus
He chose not to disclose his prediction for airfare prices this year, simply stating that they would be influenced by market forces.
Business travel in North America was affected in the last months of 2023 and the beginning of 2024 due to the conflict in Gaza and worries about the uncertain situation in the Middle East.
However, there were indications of a rebound in demand within the United States market during the second and third quarters.
IAG stated that it plans on investing £7 billion in British Airways within the next three years. This investment will be allocated towards IT improvements, following several system failures, and acquiring new aircraft.
“According to Mr. Gallego, British Airways is our most valuable resource and has significant potential for growth, which is why we are making investments in it.”
IAG reported that British Airways’ punctuality at Heathrow Airport in January rose to nearly 80%, attributing it to “integrated planning, continued hiring and training, and improved performance monitoring.”
It was also mentioned that a new operating model will be implemented for London Heathrow during the summer.
IAG Loyalty, the division responsible for managing Avios, the frequent flyer currency, saw a significant increase in operating profit, reaching £280m. This marked a 17% growth from the previous year and a 59% increase compared to 2019.
The source of this information is the Independent website.
