Air France-KLM, British Airways to lift capacity despite outlook

Air France-KLM and British Airways owner IAG SA unveiled plans to lift passenger capacity close to pre-Covid levels, despite widespread concerns regarding the impact of higher living costs on demand. Available seating at London-based IAG is expected to reach around 95% of the 2019 figure in Q1 2023, while its Franco-Dutch rival is targeting 90%, according to statements Friday. IAG CEO Luis Gallego said that the recovery continues to be spurred by a pent-up desire for vacations and visits to friends and family following the coronavirus crisis. The capacity hikes represent a gamble on leisure bookings remaining strong in an increasingly challenging economic environment, with consumer spending pinched by rising inflation and a jump in energy costs. Business travel, vital to network carriers like BA and Air France, is returning more slowly, Gallego said. Investors appeared less confident in the outlook for the firms, with shares of Air France-KLM trading 7.9% lower as of 10:22 a.m. in Paris and IAG priced down 1.3%. Lufthansa, the region’s other main full-service carrier, on Thursday also predicted that the desire to travel will remain strong. The stock traded little changed Friday. IAG, which also owns Iberia of Spain, Ireland’s Aer Lingus and discount specialist Vueling, will lift capacity from 87% of 2019 levels during the current quarter, and Air France-KLM from 85%.<br/>