International Airlines Group, parent company of British Airways, Iberia and Aer Lingus, has agreed to acquire the remaining 80 percent of Spanish carrier Air Europa from Globalia for €400 million (US$422 million), the company announced Thursday. IAG took a 20 percent stake in the carrier last August, and previously pursued and abandoned a prior acquisition play.
“This agreement will enable Iberia’s Madrid hub to compete on equal footing with other European hubs and consolidate its positioning in the South Atlantic,” IAG CEO Luis Gallego said Friday on an earnings call.
The acquisition is subject to regulatory approvals and could take 18 months to close, according to the company.
Corporate Segment
Leisure demand continues to lead IAG’s recovery, but “business bookings remain stable,” Gallego said.
“We think business will get back to 85 percent of where we were pre-pandemic, maybe better,” IAG CFO Nicholas Cadbury said. “Some of the American carriers are seeing better, but that is our working assumption.” He added that the shift to work from home has contributed to that outlook, and that the company “expects leisure will fill up that space going forward.”
At the end of the fourth quarter, BA’s business volume was at 56 percent of 2019 levels and business revenue at 70 percent, Gallego said. For Iberia, business volume was at 70 percent of 2019 levels and business revenue was at 86 percent.
“We see some positive recovery in February and hope that to continue through the year,” Gallego said. “We consider we will have business traffic of around 80 percent to 85 percent of [what] we had in 2019.”
Q4 and 2022 Metrics
IAG reported fourth-quarter revenue of €6.4 billion, nearly double from €3.5 billion a year prior. Full-year revenue was €23.1 billion compared with €8.5 billion in 2021. Passenger revenue was €5.4 billion for the quarter and €19.5 billion for the full year. Profit before taxes was €249 million for the quarter and €415 million for the year.
The group continued to rebuild capacity in 2022 as Covid-19 restrictions eased or were removed in most of the company’s markets, according to IAG. Group capacity for the fourth quarter was 86.6 percent of Q4 2019 levels and 78 percent for 2022. Aer Lingus reached 98.5 percent capacity in Q4, Iberia was at 92.8 percent and British Airways was at 79.8 percent. By region, Europe was at 96 percent, domestic markets were at 104 percent restored, Latin America and the Caribbean were at 85.5 percent, and Africa, the Middle East and South Asia were at 88.8 percent. Asia-Pacific continued to lag at 19.2 percent.
Fourth-quarter North American capacity was at 94 percent and at 83.9 percent for the full year compared with 2019 levels. BA was able to restore its network to North America by the end of the year, reopening seven routes and adding new service to Portland, Ore. Iberia restarted flights to San Francisco and launched new routes to Washington, D.C., and Dallas. Aer Lingus reopened six North American routes during the year.
IAG expects full-year 2023 capacity to be about 98 percent of 2019 levels with the first quarter at 96 percent. The company anticipates full-year operating profits before exceptional items to be between €1.8 billion and €2.3 billion. It also expects a first-quarter operating loss of about €200 million.
