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IAG, the owner of British Airways, and Air France-KLM are the latest airline groups to report record profits as resilient demand for travel and high ticket prices have powered the industry’s recovery from the pandemic.
IAG on Friday reported record operating profit before exceptional items of €1.25bn for the second quarter, the start of the peak summer season, more than quadruple the €295mn a year earlier.
The Anglo-Spanish company, which owns a clutch of airlines including Iberia and Aer Lingus, said demand for flying remained strong and reported “no sign of weakness in forward bookings”. Rival Air France-KLM meanwhile reported rising revenues and a record operating margin and profit in the second quarter, as passenger numbers increased and demand for long-haul flights rebounded.
The two full-service carriers followed record earnings from budget airlines easyJet and Ryanair, underlining booming demand for travel in spite of the weak economic backdrop in Europe. Airline revenues have also been boosted by passengers’ willingness to pay high ticket prices. Fares have risen as a result of airlines’ increased costs and elevated consumer demand amid an industry-wide shortage of planes. Airport trade body ACI Europe last month said ticket prices had risen 30 per cent year on year in Europe.
IAG said “very strong leisure demand” across all its airlines and cabins had offset a slower recovery for corporate travel and that it believed customers had “prioritised holidays and visiting friends and relatives”.
The airline group reported a 36 per cent year-on-year rise in passenger revenue in the second quarter to €6.7bn, even as passenger numbers rose more slowly, by 17 per cent. The company did not change its outlook, last updated in May, of a full-year operating profit before exceptional items surpassing the €1.8bn-€2.3bn range. The results beat market expectations, in part because of better than forecast passenger yields, analysts at Goodbody said. Still, IAG conceded it had suffered some operational challenges this year, with British Airways “particularly affected” because of its exposure to London’s congested airspace and “complex schedule”. “Some of our operations are not where we would want them to be and this is affecting our overall customer service,” IAG said.
Meanwhile, Air France-KLM said operating profit more than doubled to €733mn in the second quarter, a record. Steven Zaat, the group’s chief financial officer, said its performance had also been driven by strong leisure traffic, including in premium cabins. Like IAG, Air France-KLM reported no sign of a slowdown in demand, or ticket yields, into the second half of the year. Revenues at Air France-KLM increased by 14 per cent from the second quarter of last year to €7.6bn, and the group’s operating margin reached 9.6 per cent, above a mid-term goal of 7-8 per cent. The group’s capacity in Asia and the Middle East increas
Quote from BB at 9:50 on Tuesday 2nd November 2021 - "This is not going anywhere near 2.00 for a very, very, very long time -If it ever will" I guess only time will tell, but your prediction looks a little cautious. No malice intended just an observation.
Perhaps people ought to be a little more realistic with their predictions of doom or euphoria.
Hi My daughter works for BA and she was telling me they have 56 flights a week to New York from start of November at present there is next to none. Also after the mass redundancy of cabin crew last year they are now recruiting those in the priority return pool as short of staff! All good news, I think
Good morning ,
Yesterday afternoon’s US Government announcement about the easing of travel restrictions is a major milestone on our slow journey to recovery. It’s what we have all been waiting for and – finally – it’s something that should give hope to everyone in the BA family!
It’s been almost 18 months since air travel to the USA was effectively banned, and we have felt the pain more than most airlines. America is such an important market for us, for both business travel and holidays alike. The news that fully-vaccinated Brits will be allowed to enter the USA by the end of November is a big step forward, although we are still waiting to understand some of the finer details. If you’re an avid follower of airline stocks, you’ll have seen how positively the markets reacted to the news.
The USA announcement comes on the back of good news on Friday too, with the UK Government announcing changes to the traffic light system which gets rid of the amber list and eases some of the arduous and expensive burden of testing on travellers into the UK. There is still more to do to ensure we have a level playing with the rest of Europe but it’s a start.
We have a long, tough journey ahead of us but it’s important we celebrate when there’s reasons to be optimistic. Let’s all keep doing what we can to stay safe, and together we can look forward to reconnecting families, friends and businesses across the Pond.
Kind regards,
Sean, Andrew, Anthony, Ben, Colm, Jason, Lisa, Neil, Stuart, Tom and Rebecca
Your Management Committee
https://www.infosecurity-magazine.com/news/british-airways-plans-3bn-breach/
You mean this article