British Airways owner to return to pre-Covid levels of profit 'within next few years' after 2022 rebound

British Airways owner IAG has cruised back into profit as the airline industry continues to rebound from the depths of the pandemic.

The group made an operating profit before exceptional items of €1.26 billion (£1.1bn) in 2022, a swing from a massive €2.97bn loss the year before. This year, IAG expects to generate between €1.8bn and €2.3bn in earnings. Revenue also jumped in 2022, from €8.45bn in 2021 to just over €23bn. IAG also confirmed that it had agreed to buy the remaining 80 per cent of shares it does not own in Spain’s third largest airline Air Europa for €400 million (£353m).

IAG chief executive Luis Gallego said 2022 was “a year of strong recovery, driven by sustained leisure demand and markets reopening”. He added: “At this point of the year we continue to see robust forward-bookings, while also remaining conscious of global macro-economic uncertainties. We are transforming our businesses, with the intention of returning IAG to pre-Covid levels of profit within the next few years, through major initiatives to improve customer experience and operational performance. With the acquisition of Air Europa now agreed but subject to regulatory and other approvals which could take around 18 months, we are intending to welcome another leading airline to the group. This acquisition will enable us to grow Madrid as a hub, offering a gateway to Latin America and beyond, with benefits for customers, employees and shareholders.”

Sophie Lund-Yates, lead equity analyst at investment platform Hargreaves Lansdown, said: “The impressive regaining of altitude comes as a direct result of Covid restrictions easing and a return to more normal travel. As a long-haul specialist, IAG has been one of the last names in the sector to gain momentum following the pandemic. Of course, aviation has flown straight into another hurdle in the form of a cost-of-living crisis. So far it seems pent up demand for travel is keeping things propped up, but there is a limit to how long this can continue. It’s heartening to see IAG’s capacity ramping back up to pre-pandemic levels - getting to this point didn’t come without its well-publicised challenges.”