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(Alliance News) - International Consolidated Airlines Group SA swung to profit in the third quarter, as revenue improved on pre-pandemic levels, despite lower capacity, it said.
The British Airways parent swung to a pretax profit of EUR1.01 billion in the three months that ended September 30 from a loss of EUR714 million a year before.
Revenue nearly tripled year-on-year to EUR7.32 billion from EUR2.71 billion.
Passenger revenue saw the strongest recovery, growing to EUR6.42 billion from EUR2.00 billion. Compared to pre-pandemic 2019 levels, it was 22% higher.
"By the end of quarter 3, premium leisure revenue had fully recovered to 2019's level, despite capacity being significantly lower. Business channel revenue had recovered to circa 75% of 2019's level," IAG said.
In the third quarter, passenger capacity was at 81% of its 2019 level, rising from 78% in the second quarter. This was primarily due to its key regions of European shorthaul, North America, and Latin America & Carribean.
IAG said it plans to achieve overall capacity at about 87% of 2019 levels in the fourth quarter, and around 78% for the whole year.
"British Airways' capacity for the quarter was in line with previous guidance and operational performance significantly improved during the quarter, with further improvements planned in order to achieve the levels we expect," the firm said.
Other revenue increased 77% to EUR540 million. Cargo revenue fell 7.9% to EUR373 million.
Total operational expenditure nearly doubled to EUR6.12 billion from EUR3.19 billion.
"Costs were impacted by the significant increase in capacity versus 2021, together with costs in the first half of the year reflecting the need to complete training and maintenance activities ahead of the group airlines' Summer flying programme," IAG explained.
Net debt fell 5.2% to EUR11.06 billion at September 30, compared to EUR11.67 billion a year before. Cash increased by EUR1.32 billion to EUR9.26 billion at the end of September.
IAG expects cash to be lower and net debt to increase by the end of December, as it returns to normal pre-Covid patterns of seasonality.
Shares in IAG were down 1.2% to 118.24 pence each in London on Friday morning. The wider FTSE 100 index was down 0.8%.
With the current fuel prices and exchange rates, IAG expects pre-exceptional operating profit to be around EUR1.1 billion in the full year, with net cash flow from operations to be 'significantly positive'. This is on the proviso that there are no further hits from Covid-19 and geopolitical developments.
In 2021, IAG posted a pre-exceptional operating loss of EUR2.97 billion.
"While demand remains strong, we are conscious of the uncertainties in the economic outlook and the ongoing pressures on households. Against this backdrop, we are focused on adapting our operations to meet demand, strengthening our balance sheet by re-building our profitability and cashflows and capitalising on our high level of liquidity. This will allow us to allocate capital while investing in a disciplined way in our service and our people, to build capacity and enable future growth," said Chief Executive Officer Luis Gallego.
By Elizabeth Winter; elizabethwinter@alliancenews.com
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