British Airways parent company IAG has returned to profit as it rebounds from Covid-enforced lockdowns that ravaged large sections of the travel and airline industries.
IAG made an operating profit before exceptional items of €1.26 billion (£1.1 billion) in 2022, a swing from a loss of €2.97 billion (£2.62 billion) the year before, and all of its airlines were profitable last year.
Chief executive Luis Gallego said 2022 was “a year of strong recovery, driven by sustained leisure demand and markets reopening”.
IAG, reporting its first annual profit since the pandemic, forecast that earnings could jump by about 90 per cent in 2023.
Mr Gallego said IAG, which also owns Iberia, Vueling and Aer Lingus, was confident of robust forward bookings but remained conscious of global uncertainty.
“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,” he said.
“Our unique group structure allows us to maximise revenue and cost synergies, and invest capital to achieve strong returns while continuing progress towards net zero by 2050.”
The group agreed on Thursday to pay €400 million to Spain's Globalia for the remaining 80 per cent of Spain-based Air Europa that it did not already own, a deal aimed at expanding its position in the Latin American market.
“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,” said Mr Gallego.
“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.
“I would like to thank the teams across IAG for their exceptionally hard work in addressing the challenges of ramping up the operation throughout the year.”
Even if IAG meets a forecast 2023 operating profit in the range of €1.8 billion to €2.3 billion, it would still be well below pre-pandemic levels of €3.3 billion in 2019.
IAG shares have soared 30 per cent since the start of 2023.
“The star of the show is a renewed deal for Air Europa,” said Alex Irving, an analyst at Bernstein Research.
“While terms are not as favourable as the group acquires a more indebted business, we still see this as the right strategic move for the company and accretive to medium-term earnings.”
Fares could come down along with unit costs once the group reaches 100 per cent of 2019 capacity, Mr Gallego said.
The currency conundrum
Russ Mould, investment director at online trading platform AJ Bell, says almost every major currency has challenges right now. “The US has a huge budget deficit, the euro faces political friction and poor growth, sterling is bogged down by Brexit, China’s renminbi is hit by debt fears while slowing Chinese growth is hurting commodity exporters like Australia and Canada.”
Most countries now actively want a weak currency to make their exports more competitive. “China seems happy to let the renminbi drift lower, the Swiss are still running quantitative easing at full tilt and central bankers everywhere are actively talking down their currencies or offering only limited support," says Mr Mould.
This is a race to the bottom, and everybody wants to be a winner.
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- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
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UK-EU trade at a glance
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England 19 (Try: Tuilagi; Cons: Farrell; Pens: Ford (4)
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Set-jetting on the Emerald Isle
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Started: 2021
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Based: Tunisia
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Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
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Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO
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Sector: Education Technology
Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed
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