Shares of two of Europe's largest airlines took opposite courses on Thursday after British Airways owner IAG reported record profits for 2023, while rival Air France-KLM announced it had swung to a loss in the final three months of the year due to unrest in the East. Middle. .
IAG, which owns airlines including British Airways, Aer Lingus and Iberia, saw its pre-tax profits rise to record levels of 3.06 billion euros ($3.32 billion) as it benefited from “strong and sustained demand” for flights it was driving to a significant extent. Great Travellers. for leisure.
In contrast, Air France-KLM saw its profits decline in 2023, as turmoil in the Middle East and higher costs, resulting in part from a collective pay deal with KLM employees, pushed the Paris-headquartered airline to a loss in the fourth quarter.
IAG's IAG,
London-listed shares rose 1% on Thursday after increasing 1% over the past 12 months. Air France-KLM's AF,
Paris-listed shares fell 8% on Thursday after losing 41% of their value over the previous year.
IAG's bumper profits came as the airline owner doubled its operating margins year-on-year, as it successfully reduced its costs per passenger by increasing capacity to 97.5% of pre-coronavirus levels.
The owner of British Airways recorded a 32.6% increase in passenger revenues, as higher tourist demand offset a slow recovery in sales to business travellers. This helped offset a 28.4% decline in revenue from its freight transportation business.
In contrast, Air France-KLM recorded a loss of 56 million euros in the last quarter of 2023, as the outbreak of fighting between Israel and Gaza in October led to the cancellation of flights, which increased the airline’s costs and offset a 6.7% increase in Its final costs. Quarter revenue.
Over the full year of 2023, Air France-KLM saw its revenue increase by 13.7% to €30 billion, an uptick that lifted full-year EBITDA by 14% to €4.2 billion.
Barclays analysts said they expect both Air France-KLM and IAG to benefit from lower fuel costs that will partly offset higher costs in the rest of the business due to “volatile industrial relations”.
Barclays analysts noted that markets have favored low-cost airlines in Europe over national carriers over the past three months, with EasyJet EZJ,
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and Wiz Air Wiz,
Shares of airlines Air France-KLM, IAG and Lufthansa LHA rose by 19.6% on average, compared to a decline of 6.6%.
“While we see strong business prospects for low-cost airlines, we believe that the bleak outlook for airlines is greatly exaggerated,” Barclays analysts said.
