Early Signs of Recovery for IAG Group
The IAG group, which brings together Iberia, British Airways, Vueling, Aer Lingus, and Level, is benefiting from a robust rebound in travel demand amid a full-blown tourism upswing. The group posted a net profit after tax of 2.655 billion euros in 2023, more than six times the 402 million euros of the previous year, and surpassed pre-pandemic levels. In fact, the group managed to restore its pre-COVID seat capacity in most of its key markets, averaging 95.7% of the 2019 level.
Ownership of Iberia and Vueling saw total revenues rise to 29.453 billion euros, up 27.7% from the prior year, while operating profit climbed to 3.507 billion euros, nearly triple the year before, according to data provided to the National Securities Market Commission (CNMV). At the same time, gross debt was reduced to 16.082 billion euros as of the end of September, down 19.5% from the 2022 year-end level.
During the year, IAG’s airlines carried a total of 115.5 million passengers, a 22% increase, with an average cabin load factor of 85.3% of available seats, up 3.5 percentage points from the previous year. The company emphasizes that demand remains solid, with particular strength in leisure travel. For 2024, IAG has already secured 92% of its expected passenger revenue for the first quarter and 62% for the first half, ahead of its position a year ago. The group plans to raise seat capacity by 7% during the year.
De facto, there is no dividend at the moment.
Despite the rebound in activity and results, IAG continues to refrain from dividend payments. The company suspended a supplementary dividend at the onset of the pandemic when the business was fully halted, and it has not yet resumed shareholder distributions.
Last year, the group explained that the dividend restriction stemmed from the parent companies of the holding’s airlines being unable to pay dividends to IAG because of public support received, including ICO loans to Iberia and Vueling. Now, only partial restrictions remain for British Airways.
“The future capacity to distribute dividends will depend on liquidity needs and distributable reserves of the main operating subsidiaries, as well as their ability to pay dividends to the Parent, combined with the company’s own distributable reserves and liquidity,” the group summarized.
“In 2024, we will execute our strategy, creating long-term value in the business. The focus will be on strengthening our airlines, exploring growth opportunities that require light capital, and operating within a strong financial and sustainability framework,” commented IAG’s CEO, Spain’s Luis Gallego.