Aer Lingus owner IAG reported on Friday 24 February its first annual profit since the pandemic and forecast earnings could jump almost 90% this year as business continues to rebound.
Details
Chief executive Luis Gallego said IAG, which also owns Iberia, Vueling and British Airways, was seeing robust forward bookings, although it remained conscious of the global macro-economic uncertainties.
The group agreed on Thursday 23 February to pay €400 million to Spain's Globalia for the remaining 80% of Spain-based Air Europa it did not already own, a deal aimed at expanding its position in the Latin American market.
IAG reported an operating profit of €1.22 billion for 2022 and forecast 2023 operating profit in the range of €1.8 billion to €2.3 billion. That would still be well below pre-pandemic levels of €3.3 billion in 2019.
Operating profit in 2022 was just ahead of analyst expectations for €1.196 billion and overturned two years of losses when COVID-19 travel restrictions hit airlines across the world.
"The star of the show is a renewed deal for Air Europa. 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," said Alex Irving, an analyst at Bernstein Research.
IAG shares were down 2% soon after the market opened on Friday 24 February but have soared 30% since the beginning of the year as optimism grows about the robust appetite for travel despite some gloomy economic forecasts.
"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," Gallego said.
Fares could come down along with unit costs once the group reaches 100% of 2019 capacity, Gallego added on a media call.
Expected Air Europa Deal Completion Timeline
The Air Europa deal is expected to complete in 18 months, subject to regulatory approvals.
Read More: Aer Lingus Records €45m Operating Profit Before Exceptional Items For 2022
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