British Airways has “invested significantly” to improved its operational performance at Heathrow from last year – but there is still room for improvement across the International Airlines Group (IAG).
The disclosure came from BA’s parent company as it reported as slight decline in year-on-year first half net profits from €921 million to €905 million and the abandonment of a planned takeover of Air Europa.
Total revenue for the six months was up to €14.7 billion from €13.5 billion amid ongoing high travel demand, with operating profit rising by €49 million to €1.3 billion.
More: IAG ‘facing possible objections’ to Air Europa takeover bid
IAG said it was making “good progress” with operational and customer initiatives at BA.
The launch of a new operating model by BA at its Heathrow hub in April involved better team structures, greater management oversight and investment in a number of technology and software tools to help decision-making, according to IAG.
“British Airways has invested significantly to improve its operational performance from last year,” the parent company said, adding that “significant investment” is being made in updating its website and customer app.
The UK carrier’s on time performance improved by 15 percentage points to 75.5% over the first six months of 2023, leading to lower disruption costs and better customer NPS (Net Promoter Score).
“There is still scope to improve our own performance, whilst recognising that the external operating environment remains challenging,” IAG added.
“We continue to see high levels of air traffic flow restrictions due to air traffic control staffing issues, despite Europe’s ATC fees rising to record levels. Supply chain issues are also affecting aircraft technical availability.”
BA has implemented a “pathfinder” tool to optimise aircraft allocation in response to network disruption. The airline is also in the middle of a “major commercial IT upgrade that will secure both revenue and cost benefits”.
The airline is also making further progress with the introduction of its Club Suite, which is now on 69% of the Heathrow long-haul fleet, while a refresh of its lounges globally has started.
IAG, which also owns Aer Lingus, Iberia, Vueling and Level, reported “continuing robust demand” for travel, with the core markets of North Atlantic, Latin America and intra-Europe performing well.
However, the group added: “We are seeing some softness in long-haul pricing in Dublin, as well as in the Asian markets, both of which are small in relation to IAG’s total capacity.”
Full year capacity growth is being maintained at 7% across the group.
IAG pledged to continue investing in the North Atlantic – the largest long-haul market from Europe, worth around €38 billion a year in revenue – together with Latin America and European short-haul.
The group’s Atlantic Joint Business represents around 58% share of the London-US market, with the North Atlantic now a more consolidated market among carrier alliances.
IAG chief executive Luis Gallego said: “We see continuing strong demand for travel in the attractive core markets in which we operate: North Atlantic, Latin America and intra-Europe.
“We delivered a good performance in the first half of 2024, with operating profit €49 million ahead of the same period last year.
“We are pleased to announce a return to paying a dividend, which reflects our confidence in the business, our performance and our transformation.
“We are delivering on our strategy and our commitment to sustainable shareholder returns.”
Elizabeth Williams, aviation partner at international law firm Gowling WLG, said in response to IAG’s interim results: “Travel demand has boomed since the end of the pandemic and this has benefitted IAG’s margins with the Easter and summer holiday periods proving profitable.
“Inflation continues to create greater costs for airlines and has impacted IAG with higher fuel costs.
“But the company is diversifying, having recently come to an agreement with Spanish multi-energy company Repsol for the purchase of more than 28,000 tons of SAF, the largest SAF purchase in Spain to date, which will support its journey to net zero and reduce its vulnerability to varying jet fuel prices
“Despite some issues arising from the conflict in the Middle East, corporate travel is returning, and shareholders will be confident in the group’s portfolio of brands which are well established and trusted.
“The company is still looking to grow its presence in Europe, evidenced by its attempted acquisition of Air Europa, but they face strong competition from existing rivals and will need to offer passengers value for money to succeed.”