IAG: 'Good Recovery' for Corp. Travel in Q2

International Airlines Group executives on a Friday second-quarter earnings call described the corporate travel segment as "resilient," "steady" and in "good recovery."

Though corporate still trails the leisure demand recovery, it has "different recovery rates across the airlines," IAG CEO Luis Gallego said. IAG is composed of British Airways, Iberia, Aer Lingus, Level and Vueling.

"At BA, we are still in volume around 65 percent and revenue around 80 percent compared with 2019," Gallego said of corporate demand, adding that capacity at British Airways also has not recovered to 2019 levels.

"At Iberia, the volume is around 90 percent, and the revenue is above the revenue they had in 2019, with an increase in capacity," Gallego said. For Aer Lingus, "volumes are close to 100 percent and revenue at 95 percent. So different performances, but a good recovery in general."

Iberia CEO Marco Sansavini said that the carrier's second-quarter corporate revenue from and to Latin America was ahead of that in the second quarter of 2019. "That's the first time that's happened since Covid, demonstrating the resilience of demand over there," he said.

For BA, second-quarter North Atlantic business volume was up more than 13 percent year over year, BA chairman and CEO Sean Doyle said. "That really helped get a better mix of traffic across the network, and it helped us drive load factors up by a point to about 88 percent."

Doyle added, however, that while volume through corporate channels is 65 percent of 2019 levels, "when we look at the purpose of travel through all channels, it's a little bit higher," he said. "We think the volume of people traveling for business is probably up to above 70 percent and revenue more like 85 percent, because we do see traffic that used to book through a business channel, some of that now is booking through our direct channel. But generally speaking, it's steady improvement and steady growth, particularly across the North Atlantic routes."

IAG Q2 Metrics

IAG reported second-quarter passenger revenue of more than €7.4 billion, up 9.9 percent year over year. Total revenue was nearly €8.3 billion, up from €7.7 billion a year prior. The company's operating profit for the quarter was more than €1.2 billion, down about 0.8 percent year over year. 

Capacity for the second quarter increased 8 percent compared with Q2 2023 for the total network. The North Atlantic accounts for about 32 percent of capacity, which increased 6.1 percent year over year. Europe (not counting Spain and the United Kingdom) is next with 27 percent of capacity, which increased 5.8 percent. Latin America and the Caribbean accounts for 18 percent of IAG capacity, which increased 17 percent during the second quarter. Asia-Pacific accounts for just more than 4 percent of the company's capacity, but it increased nearly 32 percent year over year in Q2. 

The outlook for 2024 includes continued strong demand for IAG's core markets of the North Atlantic, Latin America and intra-Europe. Full-year 2024 capacity growth is projected to be 7 percent year over year, the same as for the third quarter. 

 IAG Q1 performance