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Premium leisure travel helping boost performance at BA owner

British Airways owner International Airlines Group expects to return to profit in the current quarter on the back of a strong recovery in demand.

Premium leisure has become the top performing segment across the group while business travel is at its highest level since the start of the pandemic.

The continued easing of government-imposed travel restrictions, particularly in the UK, resulted in improved travel demand, with no noticeable impact from the war in Ukraine, IAG reported.

However, the impact of the Omicron variant had a negative short-term impact in January and February on the operating result, passenger bookings and cancellations

BA is focusing on “improving operations and customer experience, including moderating planned capacity at Heathrow” following the recent lifting of travel restrictions and the steep ramp up in capacity, IAG said.

Current IAG passenger capacity plans for remainder of 2022 are for around 80% of 2019 capacity in the current quarter, 85% in the summer peak and 90% in the fourth quarter, resulting in full-year capacity of around 80% of 2019, with North Atlantic close to full capacity by the third quarter.

IAG, which also owns Are Lingus, Iberia and Vueling, trimmed after tax losses for the three months to March 31 to €787 million from more than €1 billion in the same period last year as passenger revenue rose to €2.6 billion from €459 million. The pre-tax loss was reduced by 25% to €916 million.

The result came as passenger carryings for the three months soared to 14.3 million from 2.6 million year-on-year.

Chief executive Luis Gallego said: “Demand is recovering strongly in line with our previous expectations. We expect to be profitable from the second quarter onwards and for the full year.

“Premium leisure continues to be the strongest performing segment and business travel is at its highest level since the start of the pandemic.

“As a result of the increasing demand, forward bookings remain encouraging. We expect to achieve 80% of 2019 capacity in the second quarter and 85% in the third quarter. North Atlantic capacity will be close to fully restored in the third quarter.

“The group’s operating loss reduced significantly in the first quarter compared to last year, with our losses reflecting normal seasonality, the impact of Omicron and costs associated with ramping up operations.”

He admitted: “Globally the travel industry is facing challenges as a result of the biggest scaling up in operations in history and British Airways is no exception.

“The welcome removal of UK’s stringent travel restrictions, combined with strong pent-up demand, have contributed to a steep ramp up in capacity.

“The airline’s focus at the moment is on improving operations and customer experience and enhancing operational resilience.”

Gallego added: “We’re proud that our leadership in tackling climate change continues to be recognised at a global level. The Transition Pathway Initiative (TPI) has awarded us its highest ranking for carbon performance. It rated IAG in the top 3% of almost 500 businesses for its alignment to scientific targets.”

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