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Bloomberg
British Airways (BA) parent IAG SA reported a second-quarter profit and said it expects to post positive earnings for the full year as a rebound in travel led by premium leisure bookings more than makes up for capacity curbs tied to the industry’s staffing crisis.
IAG had an operating profit of 287 million euros ($293 million) in the three months, ahead of analyst estimates, according to a statement. Earnings are building further in the current quarter, while net cash flow should be “significantly†positive for the year.
“We returned to profit for the first time since the start of the pandemic following a strong recovery in demand across all our airlines,†Chief Executive Officer Luis Gallego said in the release. “Forward bookings show sustained strength and North Atlantic demand continues to grow.â€
BA scrapped 13% of its schedule from April through October as the dismissal of 10,000 workers during the coronavirus pandemic leaves it struggling for staff as demand rebounds. Still, ticket prices have surged against the background of strong pent up demand and limited capacity, helping to make up for lost revenue from the scrapped flights.
Shares of IAG gained 3.3% in London, where the company is based, before trading 2% higher.
Premium leisure sales had almost full recovered to 2019’s level by the end of the second quarter, despite capacity being lower, while business-channel revenue was 60% back. Fares have been exceptionally strong across all segments, Gallego said on a media call, citing domestic flights in Spain and routes to Latin America where demand has outstripped the pre-Covid norm in recent weeks.
Caps on passenger numbers at London Heathrow will limit capacity to 80% of 2019 levels over the summer and 85% in the fourth quarter, a reduction of 5% for the second half of the year compared to previous guidance. Gallego said Heathrow is now performing in line with other hubs and that he expects operations to be much more stable by the end of the year.