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British Airways owner IAG reported a surge in annual profits as the carrier became the latest to cash in on sustained demand for travel and high ticket prices.
The airline group said on Thursday that operating profits more than doubled to €3.5bn last year and surpassed the €3.3bn it made in 2019, the last year before the pandemic disrupted aviation.
The company, which owns a clutch of airlines including Spain’s Iberia and Ireland’s Aer Lingus, put the performance down to “strong and sustained demand for travel”, particularly from holidaymakers, and said it expected business to “continue to be robust” this year.
The return of business travel has been slower, IAG said, but this has been offset by high demand from tourists for business and first-class seats.
Airlines have profited from a boom in travel since the end of disruptions caused by Covid-19 bans, with passengers undeterred by high ticket prices. The high fares have allowed major airline groups, including IAG, to record strong profits while only slowly rebuilding their flying schedules.
IAG flew 95 per cent of its pre-pandemic capacity in 2023, while passenger revenue rose 33 per cent to €6.4bn from a year earlier.
In contrast, capacity at low-cost airlines such as Ryanair and Wizz Air has been above 2019 levels as their business models rely on packing in passengers paying lower fares.
Investors are yet to fully buy into the recovery though, amid concerns that the high fare environment will soften as airlines put more planes into the skies.
IAG shares are flat over the past 12 months, while those of lower-cost airlines that fly on point-to-point routes in Europe, including Ryanair and easyJet, have risen by double digits over the same period.
