IAG fourth-quarter profit doubles, sees higher capacity in 2024

British Airways-owner IAG SA more than doubled its profit in the fourth quarter and managed to exceed its pre-pandemic earnings for the year, raising confidence about robust travel demand as the airline industry heads into the busiest travel period of the year.

Profit after tax jumped to €504 million ($546 million) from €232 million a year earlier, on revenue of €7.2 billion. The company said it’s confident of generating “significant” free cash flow this year, and to boost capacity by about 7% this year. That’s more than rival Air France-KLM, which reported earnings earlier on Thursday that missed estimates. 

Read More: Air France-KLM Reports Loss as Conflicts Hurt Travel Demand (1)

European airlines are preparing for another bumper summer season, as a lack of available capacity leads to higher air fares. IAG said it’s already 92% booked for the first quarter and 62% for the first half as demand continues to be strong, particularly in leisure travel. 

The carrier group posted an operating profit of €3.5 billion in 2023, matching the average of estimates compiled by Bloomberg. IAG won’t pay a dividend for 2023, it said. 

Chief Executive Officer Luis Gallego has pledged to focus on strengthening the main businesses in 2024 and develop programs like IAG Loyalty. The company said in November that it plans to invest significantly in British Airways and its Spanish businesses. Unit costs, excluding fuel, will rise “slightly” this year as the company increases spending, it said on Thursday.