Aer Lingus returns to profit but remains below pre-pandemic levels

Owner IAG says demand for flights has not wavered after a strong summer

Aer Lingus is repairing its balance sheet and repaying the significant debt that has been taken on.

Aer Lingus owner IAG said demand for its flights had not wavered after a strong summer that saw revenue exceed pre-pandemic levels despite a cap on capacity at its London Heathrow hub and lingering covid restrictions in Asia.

Chief Executive Luis Gallego said all of IAG's carriers - which include British Airways, Iberia and Vueling - were "significantly profitable" in the quarter and the recovery looked set to continue.

The group's capacity will increase to 87% of 2019 levels in the fourth quarter, up from 81% in the third quarter.

"We continue to see strong bookings," he said. "Leisure demand is particularly healthy while business travel continue to recover steadily."

He added that while demand was strong, the group was conscious of the uncertainties in the economic outlook and the ongoing pressures on households.

Aer Lingus CEO Lynne Embleton said her company’s third-quarter results showed an operating profit of €139m, encouraging progress after a loss of €95m in the first six months of the year. However, the Aer Lingus profit for the quarter was below the equivalent quarter in 2019.

"The Q3 profitability is welcome as Aer Lingus begins the process of both repairing the balance sheet and repaying the significant debt that has been taken on," she said. "While there is much to build on, we are conscious that global and geopolitical forces causing higher oil prices, exchange rate fluctuation and rising interest rates continue to substantially increase the cost base of airlines."

IAG reported third-quarter adjusted operating profit of €1.21bn in the busy third quarter on revenue of €7.33bn, 0.9% higher than in 2019.

It expected adjusted operating profit for the year to be about €1.1bn, including the €467m loss it made in the first half.

Shares in IAG, which have risen 19% since the group said on October 13 that its third-quarter profit would be well ahead of market expectations, were trading down 1.3% in early deals on Friday.

IAG said premium leisure revenue had fully recovered by the end of the summer period, while the business channel was around 75% of 2019's level.

Additional reporting Reuters