British Airways owner, International Consolidated Airlines Group SA (LSE:IAG), returned to profit in 2022 and sealed a deal for the remaining shares in Air Europa it doesn’t own but the news failed to impress the market.
Shares fell 2% in early exchanges putting the airline top of the FTSE 100 fallers.
For the year to December 31, 2022, pre-tax profits were €431mln compared to a loss of €2.93bn in 2021 as revenue jumped to €23.07bn from €8.46bn.
The results came as the airline agreed to pay €400mln to Spain's Globalia for the remaining 80% of shares in Air Europa it does not already own.
“The board of IAG believes that the acquisition remains strategically important for the group and positions it to benefit from growth opportunities in the Latin America and Caribbean market, as well as to increase connectivity to Asia,” the company said.
IAG also gave guidance for 2023. The airline forecast full year 2023 capacity of around 98% of the 2019 level, with the first quarter seen at about 96% of the quarter one level in 2019.
Full-year 2023 operating profit before exceptional items is seen in the range of €1.8bn to €2.3 billion, with most of the improvement over 2022 in the first half of the year.
In quarter one, 2023 an operating loss of around €200mln is expected assuming no further setbacks related to COVID-19 or material impacts from geopolitical developments.
“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,” said Luis Gallego, IAG chief executive officer in the results statement.
Richard Hunter, Head of Markets at interactive investor, commented that “a pre-tax profit for the year of €415mln compares with a loss of €3.5bn the year previous, and exceeds expectations for a number of €398mln.”
But, he added, “the journey ahead is one which will need careful and constant monitoring as the airline attempts to regain its financial footing.”
He also pointed out that: “IAG has a major task in repairing its balance sheet after the pandemic tore through revenues and forced the group into substantial borrowings.”
Broker Liberum described the results as "broadly reassuring," with 2023 guidance in line with expectations.