British Airways owner to return capacity to pre-pandemic levels

British Airways parent IAG SA said it will return passenger capacity almost to pre-pandemic levels at the start of next year as demand for travel holds up despite a Europe-wide surge in the cost of living.

Capacity in the first quarter of 2023 is expected to be around 95% of the 2019 figure, compared with 87% in the current three months, London-based IAG said in a statement. The group predicted a full year-operating profit of €1.1 billion before exceptional items.

“Leisure demand is particularly healthy and leisure revenue has recovered to pre-pandemic levels,” Chief Executive Officer Luis Gallego said in the release. “Business travel continues to recover steadily.”

Europe’s network airlines remain upbeat about future demand despite rising inflation and the pinch on consumers from a jump in energy costs. Deutsche Lufthansa AG predicted that the desire to travel will remain strong, while Air France-KLM said it plans to lift capacity to 90% of pre-Covid levels in the first quarter of next year.

IAG reported an operating profit of €1.21 billion for the quarter through September on the back of a bumper holiday season, confirming guidance issued on October 13 that far exceeded analyst estimates at the time.

Shares of IAG traded 1.5% lower as of 8:25 am in London. The stock has declined 17% this year, the second-best performance on the five-member Bloomberg EMEA Airlines Index, which is down 30%.

—Bloomberg