British Airways Owner (IAG) Shares Rose 2.54% on FY23 Results

The International Consolidated Airlines Grp SA (LON: IAG) share price rose 2.54% after releasing its full-year earnings results for 2023. The company witnessed a notable increase in operating profit in 2023, supported by strong and enduring demand for travel, particularly in the leisure sector, and ongoing investments in its transformation strategy.

The operating profit before exceptional items for the full year 2023 reached €3,507 million, surpassing the previous year's figures and those of 2019. The company’s 2022 profits were  €1,247 million, while its 2019 profits were €3,253 million.

Due to its comprehensive transformation efforts, the airline group achieved an operating margin of 11.9% (2022: 5.4%). The company generated a robust free cash flow of €1.3 billion, contributing to a solid financial position with a net debt to EBITDA ratio before exceptional items of 1.7 times (2022: 3.1 times), which is below the targeted 1.8 times over the cycle.

Looking into 2024, the company anticipates continued strong free cash flow generation and disciplined capital management to preserve its robust balance sheet. It remains dedicated to creating sustainable value for shareholders and ensuring cash returns.

In 2023, the company expanded its capacity by 22.6% compared to 2022, primarily focusing on its key North Atlantic and South Atlantic markets. Initiatives aimed at transforming revenue and reducing costs have led to enhancements in the customer experience.

The operating profit from IAG’s Spanish operations reached €1.4 billion (2022: €0.6 billion), demonstrating a more diversified portfolio. The IAG Loyalty business, known for its high cash generation and profitability, saw a 17% profit increase to £280 million and welcomed 4.9 million new members, a 17% growth in membership.

The operating profit before exceptional items for the fourth quarter of 2023 was €502 million (fourth quarter of 2022: €477 million). The company continued to invest in its workforce, adding 13,000 new employees in 2023.

Luis Gallego, IAG’s Chief Executive Officer, said: “In 2023, IAG more than doubled its operating margin and profits compared to 2022, generated excellent free cash flow and strengthened its balance sheet position… In 2024, we will execute on our strategy, building long-term value into the business. We will focus on strengthening our core airline businesses and on developing IAG Loyalty and our other asset-light growth opportunities, and we will do this while operating under a strong financial and sustainability framework.”

IAG share price. 

The IAG share price rose 2.54% to trade at 156.85p from Wednesday’s closing price of 152.97p.