British Airways and Iberia parent IAG saw stronger-than-expected performances from all of its airlines in the first quarter of 2023, as buoyant leisure demand helped the European group to achieve a small operating profit during what is a seasonally weak three months.

Outlining its financial performance for the January-March period on 5 May, IAG described its results as an “outperformance”, citing a boost from lower fuel costs and high yields, alongside leisure demand that was strong in both short- and long-haul markets.

IAG British Airways

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Capacity in its core Latin America and North Atlantic markets is now back at pre-Covid levels, IAG notes, with bookings for the second quarter reflecting an “encouraging outlook” for the summer, despite business travel recovering “more slowly” than the leisure segment.

“IAG has delivered a strong first-quarter financial performance, as group airlines recovered capacity to close to pre-pandemic levels,” says IAG chief executive Luis Gallego.

The group reported an operating profit of €9 million ($10 million) for the quarter, swinging from a €718 million loss in the same period of 2022, on revenues 71% higher year on year at €5.9 billion. Its net loss of €87 million compares with a €787 million loss a year ago.

Among its airlines, Iberia recorded its “best-ever” first-quarter performance, IAG states, while British Airways was also profitable, despite being adversely affected by the slow recovery in corporate demand.

Aer Lingus was also affected by the slow recovery in business demand, the group suggests, but joins other carriers in enjoying buoyant leisure traffic. Low-cost unit Vueling, meanwhile, saw some success in efforts to build winter capacity.

Cargo revenue was down 25% year on year, but IAG notes that yields are still above 2019 levels. 

IAG is now guiding for a full-year profit that will exceed the top end of its previous guidance, which was €2.3 billion.

It expects group capacity to be at around 97% of 2019 levels for the full year.