International Consolidated Airlines (LON:IAG) revenue has touched pre-pandemic levels in the third quarter as holiday makers returned to the market.
The jump in revenue was a result of rising passenger unit revenue as opposed to a greater number of people flying. Passenger unit revenue was 21.9% higher than in 2019 while IAG operated at just 81.1% of 2019 capacity.
“This is no doubt an impressive turnaround from BA’s parent company, and comes despite come ongoing headwinds. IAG has reported a significant step up in profitability for all its airlines, which also include Iberia, Aer Lingus and Vueling,” said Derren Nathan, Head of Equity Research at Hargreaves Lansdown.
“Planes are just as full as before the pandemic but IAG is flying less of them. Premium travel is right back up there and that’s going to help profits given the lower capacity, although the recovery in business travel has not been as robust.”
Passenger revenue was €14bn in the nine months to 30 September, up from €3bn in 2021.
IAG Outlook
A return to profitability will be welcomed by IAG’s investors and the group said they expect operating profit for 2022 to be in the region of €1.1 billion, but analysts warned a return to shareholder distributions are likely to be delayed.
“IAG is on track to achieve a significant full year profit, but we’re a little disappointed that net debt is set to go back up between now and the year end, and we think a return to the dividend list could be some way off, particularly as times could start to get tough again,” Nathan said.