British Airways’ owner soars back into black for first time since start of Covid

The owner of British Airways has soared back into the black for the first time since the start of the pandemic despite airport chaos causing it to cut tens of thousands of flights. 

International Airlines Group (IAG) posted a profit of £245m for the second quarter, compared with a loss of £810m during the same period last year. 

But it has scaled back the pace of its recovery to pre-pandemic levels ‘mainly due to the challenges at Heathrow’, which has capped passenger numbers. 

Chief executive Luis Gallego said problems at Heathrow had been ‘acute’. ‘Our airline teams remain focused on enhancing operational resilience and improving customer experience. 

‘I would like to thank those customers affected for their loyalty and patience and our colleagues for their hard work and commitment. 

‘We will continue working with the industry to address these issues as aviation emerges from its biggest crisis ever.’ 

He added that ‘if everything goes well, at the end of the year we will be in a better situation’ at the London hub. 

But he said airlines face ‘historic challenges’ as travel demand surges back. 

Flight cancellations caused by shortages of staff at airports have caused misery for passengers trying to get away. Data from an aviation analytics company this month suggested British Airways had cancelled nearly a fifth of its flights, or around 60,000, from its summer schedule.

That was before Heathrow imposed a limit of 100,000 daily departing passengers until 11 September due to a shortage of ground handling and other staff, leading to more cancellations. 

Gallego said British Airways’ capacity was limited to 69.1 per cent of pre-pandemic levels in the April-June period. 

It aims to increase that to 75 per cent in the current third quarter. 

IAG, which also owns Spanish carriers Iberia and Vueling, as well as Ireland’s Aer Lingus, forecasts passenger capacity across the group at 80 per cent of pre-pandemic levels in the third quarter and 85 per cent in the fourth. For the second half overall that is 5pc less than its previous target. 

IAG’s shares fell 2.6 per cent, or 3.16p, to 118.74p yesterday. 

It said it expected to turn a profit for the year as a whole as long as there are ‘no further setbacks related to Covid and Government-imposed restrictions or material impacts from geopolitical developments’. 

Gallego said demand for premium holiday travel remained strong, with a ‘steady recovery’ for business trips. 

He said there were no signs of any weakness in demand, apparently allaying any fear of bookings dropping off as consumers face a cost of living squeeze. 

The results came as latest figures from rival Air France-KLM also showed a return to profit and a cut to its third-quarter capacity forecast. Russ Mould, investment director at AJ Bell, said of IAG’s results: ‘That doesn’t mean the turbulence is over.’ He added: ‘It is perhaps no surprise that demand is proving durable for air travel given it was denied to people by Covid restrictions for so long. 

‘However, customers’ ability to splurge by jetting off on holiday is finite and there has to be a risk that a bumper, if disrupted, 2022 summer season becomes difficult to emulate. 

‘That is particularly true when you consider how many passengers may have been alienated by last-minute cancellations and significant disruption at airports.’