BA owner says business travel resumption will lead to return to profits | International airline group

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The owner of British Airways said a recovery in business travel and high net worth passenger travel will lead to a return to profitability from the second quarter of this year.

International Airlines Group (IAG), which also owns Iberia and Aer Lingus, said while Omicron had a short-term impact on bookings in January and February, the overall easing of coronavirus-related travel restrictions improved travel demand in the first quarter, particularly in the United Kingdom.

“Demand is recovering strongly, in line with our previous expectations,” said Luis Gallego, chief executive of IAG. “We expect to be profitable from the second quarter and for the full year. High-end leisure remains the best performing segment and business travel is at its highest level since the start of the pandemic. “

The company, which posted an operating loss of €731m (£625m) in the first quarter, compared to more than €1bn in the same period last year, added that there had been “no noticeable impact” on the activity of the war in Ukraine. . Analyst consensus on IAG, which posted a loss of 3.5 billion euros in 2021, expected an operating loss of around 510 million euros in the first three months of the year.

Shares fell 8% on Friday morning, making IAG the biggest loser on the FTSE 100.

Gallego said that in the third quarter, demand in the all-important UK-US travel corridor would have almost returned to pre-pandemic levels.

“Due to growing demand, term bookings remain encouraging,” he said. “We expect to reach 80% of 2019 capacity in the second quarter and 85% in the third quarter. North Atlantic capacity will be almost fully restored in the third quarter.

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The resurgence of demand is also taking place in the hotel sector, with the revenues of InterContinental Hotels Group, owner of chains such as Crowne Plaza and Holiday Inn, up 61% year on year in the first quarter and the average price of rooms returned to pre-pandemic levels as recovery fuels “increased pricing power”.

“We saw very positive business conditions in the first quarter, with travel demand continuing to increase in nearly all of our key markets around the world,” said Keith Barr, chief executive of IHG. “The high level of demand we have seen for leisure travel continues to drive rates and occupancy rates up. We also continue to see a return to business and group travel.

IAG’s Gallego has warned that the sharp recovery, which has resulted in long delays at understaffed airports and airlines canceling hundreds of flights, has led to the biggest scaling operation in the world. airline history.

“Globally, the travel industry is facing challenges due to the biggest surge in operations in history and British Airways is no exception,” he said. “At the moment, the airline is focused on improving operations and customer experience and building operational resilience.”

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