British Airways back on track with first winter profit since 2019
With business travel recovering only slowly, BA’s premium cabins are increasing filled with leisure passengers
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Your support makes all the difference.British Airways returned to profit during the three months from January to March 2023, for the first time since 2019.
IAG, BA’s parent company, as a whole made its first profit since before the pandemic.
The group made €9m (£7.9m) in operating profit before exceptional items, compared with a loss of €750m (£660m) over the same period in 2022.
The outcome was better than expected due to higher fares and lower fuel costs, with IAG predicting full-year profits above €2bn (£1.75bn).
Routes across the Atlantic to both North America and Latin America are now back at pre-pandemic levels, IAG said. But business travel is recovering only slowly. BA’s premium cabins are increasingly filled with leisure passengers, which “has a negative impact on unit revenue” according to IAG.
The group’s chief executive, Luis Gallego, said: “IAG has delivered a strong first-quarter financial performance, as group airlines recovered capacity to close to pre-pandemic levels. All our airlines performed above expectations.
“We are seeing healthy forward bookings, with leisure demand particularly strong.”
BA’s Spanish sister airline, Iberia, is seeing business travellers returning fast. IAG says the Spanish carrier was “one of the world’s most profitable airlines in quarter 1”.
Another member of the group, Aer Lingus, is seeing “some softness” on European routes. The Irish carrier competes directly with Ryanair, Europe’s biggest budget airline, on flights to a number of destinations from its main base in Dublin.
Overall, IAG will still not be back to 2019 levels by the end of 2023; it expects capacity to be around 3 per cent lower over the current year. IAG also talked of “a number of uncertainties that currently face the sector”, including geopolitical volatility and consumer confidence.
The group said: “Our business is directly impacted by issues in the external operating environment, such as the strikes currently ongoing at French air-traffic control and Heathrow airport.”
Security staff who work at Terminal 5, BA’s main base, and belong to the Unite union, are taking a second tranche of industrial action in a pay dispute.
Rob Burgess, editor of Head for Points – the UK’s biggest frequent-flyer and business travel website – said: “If long-haul business-class ticket sales to business travellers are now in permanent decline, the industry will need to rethink how it serves the premium leisure customer.
“Having spent nine figures installing Club Suite, for example, BA has a product which is terrible for the family market – especially families with young children – due to the high levels of seat privacy, which the business market demanded.
“Other areas, such as inflight entertainment and free wifi, where European carriers have always lagged the Middle East airlines, also need addressing quickly.
“The fact that capacity is still lower than 2019, admittedly partly driven by the 747 retirements at BA, shows that, for all the positive noise in the sector, things are not yet fully back to normal.”
At the start of the Covid pandemic, British Airways grounded its entire fleet of jumbo jets, which have been largely replaced by smaller aircraft.
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