International Airlines Group (IAG), owners of British Airways, has raised its full-year profit forecast due to a surge in holiday travel demand. The airline group reportedly anticipates flying a comparable number of passengers in 2023 to pre-pandemic levels.
In Q1 2023, the group reported an operating profit of €9m (£7.9m), making it the first time since 2019 that the group recorded a profit in the first quarter. Also, there was a 3.6% increase in IAG’s share price on Friday morning.
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Following the lifting of most worldwide travel restrictions, airlines have been in a race to resume their routes. There has been a surge in demand for holiday travel, and business travel is also rebounding, albeit slower. And British Airways has not been left as the airline has benefitted from the robust demand for leisure travel on both long-haul and short-haul routes.
IAG which also owns Spanish flag carrier Iberia and budget airline Vueling, has announced it expects that its capacity for this year will be approximately 97% of the levels recorded in 2019. Consequently, it is likely that the operating profit for the entire year will exceed the €2.3 billion figure that was previously forecasted by the company.
Having incurred losses of nearly €11 billion in 2020 and 2021, the group returned to a full-year profit in 2022.
According to Luis Gallego, the Chief Executive at IAG,
“IAG has delivered a strong first-quarter financial performance, as group airlines recovered capacity to close to pre-pandemic levels. Iberia contributed a record first-quarter profit and all our airlines performed above expectations, benefiting from robust demand and a lower fuel price in the quarter.
“We are seeing healthy forward bookings, with leisure demand particularly strong, while business travel continues to recover more slowly.” He added.
Within the Nigerian context, airlines have been unable to return to pre-pandemic levels despite domestic travel resuming as early as July 2020. By 2021, months into the end of the lockdown, there was still a drop in airline demand as most people stuck to only essential travel in Nigeria as most holiday destinations in the country were yet to return to pre-pandemic conditions.
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By 2022, the condition of the domestic air travel industry in Nigeria was exacerbated by the high cost of aviation fuel. As there was an increase in aviation fuel prices from N180 in January to N400 in February, which led to a surge in airfares and a subsequent drop in demand. However, by September 2022, there was a surge in demand in the domestic air market. The domestic air market also experienced a boost with the introduction of two new startup airlines, ValuJet and Rano Air.
