Things most definitely seem to be heading in the right direction for the airline industry. Despite initial prophets of woe predicting that recovery following the pandemic could take years and years, demand has bounced back faster than most carriers dared dreamed of (and much quicker than many had planned for). And for many, it is showing in the results as the figures for 2022 are tallied.

The latest to disclose the financial earnings of the past year is International Airlines Group (IAG), owner of, among others, British Airways. While not back to pre-pandemic levels quite yet, the numbers are in stark contrast to those presented a year ago.

On Friday, the company reported its first profit since the start of the pandemic. Operating profits came in at €1.22 billion ($1.47 billion) for 2022. Net profits came in at €431 million, to be compared to a net loss of €6.93 billion in the year. And while the overall global financial climate is looking gloomy, IAG is predicting a (comparatively) stellar 2023.

The company is forecasting that profits will increase by 90%, in the range of €1.8 billion to €2.3 billion, based on current foreign exchange rates and forward jet fuel prices. This will still be lower than pre-pandemic 2019 levels of €3.3 billion. Meanwhile, passenger unit revenue was 11.0% higher than in 2019, with the increase seen particularly in the second half of 2022.

Aer Lingus aircraft at airport
Photo: Croatorum/Shutterstock

Looking at pre-COVID profits within the next few years

Luis Gallego, IAG's Chief Executive Officer, commented on the group's results,

“2022 was a year of strong recovery, driven by sustained leisure demand and markets reopening. At this point of the year we continue to see robust forward-bookings, while also remaining conscious of global macro-economic uncertainties. We are transforming our businesses, with the intention of returning IAG to pre-COVID levels of profit within the next few years through major initiatives to improve customer experience and operational performance. Our unique group structure allows us to maximise revenue and cost synergies, and invest capital to achieve strong returns, whilst continuing progress towards net zero by 2050."

Air Europa Boeing 787 Dreamliner
Photo: Martin Leber/Shutterstock
 

Shares dropped on Friday as takeover of Air Europa announced

IAG owns British Airways, Aer Lingus, Iberia, Vueling, and Level. Soon, it will - finally - add another carrier fully to its ranks. After years in the making, IAG on Friday reiterated its intention to acquire the remaining 80% of Air Europa, this time for the sum of €400 million ($423.5 million).

The deal is expected to be concluded in 18 months of granted regulatory approval. This is not entirely straightforward, as this will give IAG a firm hold over the Spanish airline market, along with flag carrier Iberia and low-cost carrier Vueling.

Gallego stated,

"This acquisition will enable us to grow Madrid as a hub, offering a gateway to Latin America and beyond, with benefits for customers, employees and shareholders."

Shares in IAG dropped 2% after markets opened on Friday, but overall they have risen 30% since the start of the year as consumer confidence in the airline industry and the UK economy continues to improve.

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