International Consolidated Airlines (LON: IAG) reported a record third quarter performance. The British Airways owner increased revenues by one-third and reduced debt in the nine months to September 2023. Even so, the share price dipped 1.09% to 141.3p.
However, there was a mixed picture. Passenger revenues are 39% higher so far this year, whereas cargo revenues have fallen by 29%. This is because there is overcapacity in air freight. Cargo revenues were less than 4% of total revenues of €22.2bn, up from €16.7bn.
British Airways, Aer Lingus and Iberia all generated strong revenue increases and profit bounced back. Third quarter passenger capacity was back up to 96.5% of the pre-Covid level. There has been additional investment in Atlantic routes.
Fuel costs have fallen and so have other costs, even though flight disruptions have held back cost improvements. Operating profit before exceptional items improved from €770m to €3bn.
In the latest quarter, gross debt was reduced by €2.4bn to €17.2bn. Net debt fell to €8bn, which is 1.4 times underlying EBITDA. Net debt should fall further after additional cash generation in the fourth quarter.
Twenty new aeroplanes have been delivered this year and seven more are on order. Current customer bookings are in line with expectations. Three-quarters of expected passenger revenues have been booked.
