IAG and Air France-KLM report record profits over summer

British Airways owner IAG and Air France-KLM became the latest airline groups to benefit from booming demand for leisure travel, as they reported record profits over the summer. IAG on Friday reported a 43% increase in Q3 operating profit before exceptional items to E1.75b, its second consecutive quarter of record results. “During the third quarter we saw sustained strong demand across all our routes,” said IAG chief executive Luis Gallego. The airline group, which also owns Aer Lingus and Iberia, reported particularly strong appetite for travel across the Atlantic and to leisure destinations in Europe. Rival Air France-KLM said its operating profit reached a record E1.34b in Q3, up 31% from a year earlier, driven by strong summer bookings. The results from two of Europe’s largest aviation groups underline the industry’s rapid recovery from the disruption of the Covid-19 pandemic. Low-cost airline easyJet has said it expects to report record profits over the summer, while London’s Heathrow airport raised its passenger forecasts this week. However, the rise in the price of oil and growing geopolitical uncertainty have raised questions over the durability of the recovery, and airline shares have fallen since the summer. Gallego said bookings for the rest of this year were “positive”, and early signs for 2024 were “in line” with expectations. “We are pleased how the business is performing . . . [but] we are very mindful of the geopolitical and macroeconomic uncertainty.” Both IAG and Air France said there had not been any significant hit to bookings from the tensions in the Middle East. But IAG’s CFO Nicholas Cadbury said strengthening the company’s balance sheet would be a “priority” over the next year, at the expense of shareholder payouts, in part because of the uncertain outlook. Net debt fell 22% from E10.4b to E8b in the first nine months of the year.<br/>