European airline brand performance in 2023 Most full year results for the 2023 calendar year have been out for a few weeks already, but before writing this post, I wanted to allow time for the stragglers to catch up and for annual reports to be published, since they often contain additional detail not available in the initial press releases. In particular, I wanted to look beneath the headline figures for the big European groups and understand the performance of the constituent airline brands that make them up. For that reason, I’m going to be focusing on operating results, as the financial co ..read more

Record profit results from IAG for 2023 Two days ago, IAG reported its full year results for 2023. I plan to spend some time digging into the detail of the results and looking at the performance by operating company, but that’s for another post. In this one I’m just going to cover the group headline figures and how they compared to my expectations. Operating profits hit €3.5 billion, 6.8% above the 2019 level. The news was also good at a pre-tax level, with £3.1 billion of profits, 3.7% higher than 2019. Both figures were all time records for the company. Margins have still not quite recovered ..read more

As has now become traditional, for my final post of the year I will look back at the year just ending and look forward into next year. Given how much AI dominated the news headlines in 2023, some at least of you will be pleased to hear that the subject is not going to be making an appearance in this round up of the year. That’s not because I don’t think it is an important topic that will have big implications for aviation. Its just that I think it deserves its own blog post. But I couldn’t resist using an AI generated image, complete with some weirdly malformed aircraft. Let’s get started on ..read more

A deep dive into the balance sheets of two of Europe’s biggest airline groups Comparing the headline profitability numbers from the quarterly results of the European airlines is interesting as far as it goes. But from time to time I like to dig a little deeper and look at some of the less well understood parts of the financial statements. Today, I want to look at Air France - KLM and IAG, both of which reported their Q3 results last week. Now that profitability has been restored, both companies are putting a lot of emphasis on improving their balance sheets, which took a pounding during COVID ..read more

Another record quarter Yesterday, IAG announced third quarter operating profits of €1,745 million, setting a new quarterly record, over 20% above the previous high set back in Q3 2017. The pre-tax profit for the quarter of €1,578 million also beat the best ever Q3, a record set in 2018. However, the large amount of debt take on during the crisis is still creating a drag on profits, with higher financing costs reducing the pre-tax profit increase to 11%. Whilst the second and third quarters set new records, on a rolling 12 month basis, pre-tax profits are still slightly below pre-pandemic level ..read more

Another airline consolidation deal in Europe This week we saw the announcement that a consortium involving Castlelake, the Danish State and Air France - KLM had done a deal to acquire the bankrupt nordic carrier SAS. That deal will see SAS leave the Lufthansa-led Star Alliance and join AF-KLM’s SkyTeam. Whilst AF-KLM will initially have only 19.9% of the equity, the company did say they had paths to increase that over time. With Lufthansa Group in the process of buying Italy’s ITA (the successor to Alitalia) and IAG trying to secure approval for its deal to acquire Spanish airline Air Europa ..read more

Pre-tax profits of €1.2 billion for the quarter Three months ago, when IAG reported its Q1 results, I expressed some puzzlement about the company's "low-balled" outlook statements for the full 2023 year. IAG’s original guidance, published on February 24th, was for operating profits in the range €1.8 - 2.3 billion, and after reporting Q1 they updated this to "above the top end of previous guidance". So “more than €2.3 billion” in plain speak. In the article linked to above, I explained why I thought a figure of around €3.5 billion would be a more reasonable number, given performance in Q1, toge ..read more

Performance for the year ending March 2023 With the release of results last week from Wizz, we now have figures from all the big European airlines up to March 2023. Whilst March isn’t a year end for many of these airlines, we have decent data for everyone for the twelve month period. It is a half year for easyJet, so we get reasonable disclosures there. All the other airlines report good data quarterly. The March quarter in 2022 was the last quarter seriously compromised by COVID, so the twelve month period to March 2023 represents the first full year of “post-pandemic” performance. For the fi ..read more

The first profitable Q1 since 2019 Last week IAG reported an operating profit of €9m for the first quarter of 2023. This was something of a milestone for what is typically the company’s weakest quarter. The last time they reported a Q1 operating profit was back in 2019. However, the company was still loss-making after finance costs, with a pre-tax loss of €121m. What was more striking was how much better the results were than expected. On February 24th, IAG gave guidance for Q1 operating losses of €200m. At that time, there was really only one month left to go in the quarter. To come out with ..read more

Lufthansa Group agrees to buy Alitalia successor, ITA On May 25th, Lufthansa Group (LHG) finally confirmed they had reached agreement with the Italian government to acquire a 41% stake in ITA Airways, the new “Italian flag carrier”, formed from wreckage of Alitalia’s latest bankruptcy using a big pile of cash from the Italian government. The agreement provides for LHG to acquire full ownership in the future, but it can only be forced to do so if ITA’s financial results go to plan. This phased approach is designed to reduce downside risk for LHG and protect it from having to consolidate 100% of ..read more