British Airways owner International Airlines Group flew back into the black for the first time since the start of the Covid-19 crisis ahead of the summer peak despite “acute” operational challenges at Heathrow.
BA’s capacity was limited to 69.1% in the quarter to June 30 due to the “challenging operational environment” at its London hub.
This compared to 57.4% in the previous three months and a planned increase to just 75% of total capacity in the summer peak.
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Spanish carriers Iberia and Vueling were the top performing parts of the group in the three months to June 30 as it returned to profit for the first time since the start of the pandemic in 2020.
IAG reported a profit after tax and exceptional items of €133 million against a loss of €981 million in the same period last year.
Net debt dropped by €688 million since December 31 to just under €11 billion, “reflecting the seasonal benefit on cash of bookings for travel in the second half of the year”.
The company, which also owns Are Lingus, reported that premium leisure revenue had almost fully recovered to 2019 levels despite lower capacity. Business travel revenue returned to 60% of pre-pandemic levels by the end of June.
IAG’s overall capacity is projected to be at 80% in the current quarter and 85% in the three months to December – 5% down for the second half of the year compared to previous guidance, mainly due to issues at Heathrow.
Key transatlantic capacity is expected to be close to 2019 levels by the end of the year.
Chief executive Luis Gallego said: ”Our industry continues to face historic challenges due to the unprecedented scaling up in operations, especially in the UK where the operational challenges of Heathrow airport have been acute.
“Our airline teams remain focused on enhancing operational resilience and improving customer experience.
“I would like to thank those customers affected for their loyalty and patience and our colleagues for their hard work and commitment. We will continue working with the industry to address these issues as aviation emerges from its biggest crisis ever.”
Announcing the group’s latest results, he said: “In the second quarter we returned to profit for the first time since the start of the pandemic following a strong recovery in demand across all our airlines. This result supports our outlook for a full year operating profit.
“Our performance reflected a significant increase in capacity, load factor and yield compared to the first quarter.
“Premium leisure remains strong while business travel continues a steady recovery in all airlines.”
Gallego added: “Iberia and Vueling were the best performing carriers within the group. The Spanish domestic market and routes to Latin America continued to lead the recovery with demand exceeding 2019 levels last month.
“Forward bookings show sustained strength and North Atlantic demand continues to grow following the lifting of the US Covid testing requirements in June.
“Although bookings into the fourth quarter are seasonally low at this time of year, we are seeing no signs of any weakness in demand.”
IAG expects its operating profit to be “significantly improved” this summer and to be positive for the full year, assuming no further Covid-19 setbacks, government-imposed restrictions or impact from geopolitical developments.