IAG Cargo Q3 revenue drops 30% YoY

International Airlines Group posted revenue of 8.6 billion euros ($9.1 billion) in the third quarter, a year-over-year increase of 18%, the company reported during its earnings call today. Cargo revenue , however, decreased 30% YoY to $278 million, despite increased volume. [caption id="attachment_57132732" align="alignright" width="300"] Photo/IAG Cargo[/caption] International Airlines Group (IAG) includes IAG Cargo, Aer Lingus , British Airways , Iberia, Level and Vueling . THE BIG PICTURE: Peak season travel helped IAG post record third-quarter performance, Chief Executive Luis Gallego said in a statement. “This is allowing us to invest in the business and reduce a significant amount of our debt,” he said. “During the third quarter, we saw sustained strong demand across all our routes, in particular the north and south Atlantic, and in all leisure destinations around Europe. “We continue to develop our hubs of Barcelona, Dublin, London and Madrid, supported by our fleet deliveries and future orders,” he said. “Our strong financial performance is enabling investment in our people and allowing us to further improve customer experience. At the same time, we will keep working towards our sustainability goals.” BY THE NUMBERS: Consolidated operating profit for IAG increased 43% to $1.85 billion in Q3. Additionally, IAG reported: 1.1 billion cargo tonne kilometers (CTKs), a YoY increase of 20%; A 41% YoY decrease in revenue from CTKs to 23 cents; Aer Lingus revenue up 16% YoY with an operating profit of $207 million; British Airways revenue up 20% YoY with an operating profit of $649 million; Iberia revenue up 19% YoY with an operating profit of $475 million; and Vueling operating profit up 26.1% YoY to $298 million. WHAT THEY’RE SAYING: Despite increased volumes, IAG cargo revenues fell flat due to low rates. “Our cargo business continues to see declines in revenue and profit as industry supply continues to exceed reducing demand for airfreight,” Gallego said. “Cargo yields remain above 2019 levels.” STATE OF PLAY: IAG continues to expand its network as the market normalizes. “Our fleet deliveries continue to be on schedule,” Gallego said. “During the nine months to Sept. 30, we have had 20 aircraft delivered as we replace both our long-haul and short-haul fleets. This comprised 12 narrowbody aircraft across all our airlines and eight widebody aircraft to British Airways and Iberia. “As announced at our half-year results on July 28, 2023, we have also ordered more aircraft for future delivery to support our network growth strategy: six Boeing 787-10s for British Airways and one Airbus A350-900 for Iberia,” he said. NOTEWORTHY: IAG continues its efforts toward sustainability targets and most recently appointed Saleem Saeed as its sustainability manager. Saeed will support IAG’s Fit for Future sustainability initiatives. “Saleem’s appointment as our sustainability manager reinforces our dedication to pioneering eco-conscious practices within the air cargo sector,” Chief Transformation Officer Jenny Critchley said in an August release. FUTURE LOOK: Despite challenges, 2023 has been a year of recovery for IAG as passenger travel returned to pre-pandemic levels, a trend expected to continue into 2024. “We expect full-year 2023 capacity to be around 96% of pre-COVID 19 levels,” the company reported. “Overall customer bookings for Q4 are as expected with around 75% of the fourth quarter’s passenger revenue already booked. Whilst we maintain good forward bookings, we continue to be mindful of wider macroeconomic and geopolitical uncertainties that might affect the remainder of this year.” Editor’s note: All amounts have been converted to U.S. dollars.

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