IAG’s cargo revenue falls 28.4% in 2023

International Airlines Group today reported 29.5 billion euros ($31.8 billion) in revenue in 2023, an increase of 27.7% year over year. However, cargo revenue fell 28.4% to $1.2 billion. [caption id="attachment_93797" align="alignright" width="300"] (Courtesy/Stuart Bailey/British Airways)[/caption] THE BIG PICTURE: Like most carriers , International Airlines Group (IAG) saw increased passenger revenue but decreased cargo revenue in the past year. IAG attributed this trend to increased cargo capacity coupled with soft market demand. BY THE NUMBERS: IAG reported $7.8 billion in revenue in Q4, up 13.1% YoY; however, cargo revenue fell 27.3% to $431.1 million. Also in Q4: IAG flew 1,304 cargo tonne kilometers (CTK), up 19.6% YoY; IAG sold 157 cargo tonnes, up 2.6% YoY; and Cargo revenue per CTK was 24 cents, down 39.2% YoY. In full-year 2023: IAG flew 4,666 CTKs, up 17.2% YoY; IAG sold 596 cargo tonnes, up 6.2% YoY; Cargo revenue per CTK was 27 cents, down 38.9% YoY; and IAG hired 13,000 employees. IAG’s subsidiary airlines reported the following 2023 cargo revenues: Aer Lingus saw $59.4 million, down 31.25% YoY; British Airways saw $817.9 million, down 28.6% YoY; Iberia saw $297.1 million, down 20.7%; and Vueling did not record any cargo revenue. WHAT THEY’RE SAYING: With cargo revenue down, the lion’s share of IAG’s increased revenue came from passenger travel. “Overall, it was a very good year with strong summer [passenger] performance and the fourth quarter performed in line with our expectations against a tough comparative set in Q4 last year,” IAG Chief Financial Officer Nicholas Cadbury said on today’s earnings call. STATE OF PLAY: While cargo revenue was down YoY, it was up compared with 2019. “In 2022, cargo yields had benefited from disruption to global supply chains, and disruption to shipping, particularly in the first half of the year,” today’s earnings report stated. “Cargo revenue increased by [$42.1 million], or 3.5%, versus 2019. The increase was primarily driven by a 23.8% increase in cargo yields compared with 2019, which included the impact of transformation initiatives. The higher cargo yields more than compensated for a decline in volumes, which were 16.4% lower than in 2019, mainly due to weaker market demand and reduced cargo capacity, particularly from the Asia Pacific region.” FLASHBACK: British Airways ranked 28th on Air Cargo Next ’s Freight 50 list of top cargo carriers, having flown 2.9 billion CTKs in 2022. IAG’s other airlines did not make the list. NOTEWORTHY: IAG also announced changes to its senior management team. IAG Chief Executive Luis Gallego said on today’s earnings call that it is IAG’s “first priority” to grow its global leadership positions. Effective April 1: Marco Sansavini will become CEO and chair of Iberia, moving from his current role as CEO of Vueling; Fernando Candela , who was appointed interim CEO of Iberia in May, will step down from that role and continue as CEO of Level ; and Carolina Martinoli will become CEO and chair of Vueling, moving from her current role as IAG Chief people, corporate affairs and sustainability officer. FUTURE LOOK: IAG is investing heavily in sustainability initiatives. “We have also made significant progress on our sustainability agenda,” Gallego said. “That, you know, is a key priority for us and all of our stakeholders. We have reduced our carbon intensity by 3.6% year on year and this week we announced a new contract that means that we have now secured one-third of our soft targets for 2030.” IAG entered into a sustainable aviation fuel (SAF) purchase agreement with Berkeley, Calif.-based eSAF producer Twelve , which will provide eSAF made from CO2, water and renewable energy . This is IAG’s largest SAF purchase agreement, according to a Feb. 28 release from the company. Twelve is contracted to provide 785,000 tonnes of eSAF to IAG over the next 14 years. “The next-generation fuel will reduce lifecycle greenhouse gas emissions by up to 90% vs. conventional jet fuel,” the release stated. “IAG is the first European airline group to announce an eSAF deal, and the agreement will enable IAG to continue increasing its SAF use, which was approximately 12% of the world’s supply in 2023.” THE BOTTOM LINE: “In 2024, we will execute on our strategy, building long-term value into the business,” Gallego said. “Our airlines operate in the largest and most attractive markets globally and we will continue to invest in our brands to transform the business, improve the customer experience and support the delivery of sustainable growth and world-class margins.” MARKET REACTION: Shares of IAG (OTCPK: ICAGY) were down 3.4% from market open to $3.69 as of market close today. IAG has a market capitalization of $9.6 billion. Editor’s note: All amounts have been converted to U.S. dollars. Register here for Air Cargo Next ’s free webinar, “The Role of Drones in the Future of Air Cargo,” on Tuesday, March 26, at 11 a.m. ET.

IAG’s cargo revenue falls 28.4% in 2023

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