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April 18, 2024


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British Airways, IAG Group, and Air France/KLM reported strong profits for 2023 as Europe’s aviation industry continues to rebound from the global pandemic.  IAG had a solid fourth quarter and year, while AF/KLM had a 4th quarter loss but a strong year overall.

International Airline Group (IAG)

IAG’s operating profit grew to €3.507 billion on revenues of €29.493 billion. IAG’s profitability in 2023 exceeded the pre-pandemic level achieved in 2019.  Full financial results can be found here:


IAG, an expanding group that owns British Airways, Aer Lingus, Level, Iberia, and Vueling, stated its profits were boosted by “strong demand” among leisure travelers. “In 2023, IAG more than doubled its operating margin and profits compared to 2022, generated excellent free cash flow and strengthened its balance sheet position, recovering capacity to close to pre-COVID-19 levels in most of its core markets,” said Luis Gallego, CEO of IAG. Results in 2023 were buoyed by a 22.6% growth in capacity, focusing on the core North Atlantic and South Atlantic markets.

He also set high expectations for 2024. “In 2024, we will execute on our strategy, building long-term value into the business. We will focus on strengthening our core airline businesses and on developing IAG Loyalty and our other asset-light growth opportunities, and we will do this while operating under a strong financial and sustainability framework. 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.”

Air France/KLM

Air France KLM posted record 2023 group revenues of €30.0 billion but a 4th quarter loss. Group capacity reached 93% of pre-pandemic levels, with a load factor of 87%. Operating profits were €1.712 billion for 2023, up from €1.193 billion in 2022.  The carrier also reduced its debt from €6.337 billion to €5,041 billion during the year.


Benjamin Smith, AF-KLM’s Group CEO, stated, “In 2023, we delivered on our commitment to strong operational and financial performance while also maintaining our position as a benchmark airline Group for sustainability. Among our major achievements, we can be satisfied of our efforts to further strengthen our balance sheet and restore the Group’s equity. We also placed a historic order for fifty Airbus A350s with purchase rights for forty additional aircraft, thereby accelerating our fleet’s renewal with latest-generation aircraft that offer improved fuel efficiency, lower CO2 and noise emissions, and an enhanced experience for our customers.”

Looking ahead to 2024, a key priority will be to continue reinforcing our performance, via the continued execution of our strategy. This year will mark Air France-KLM’s 20th anniversary, an occasion made all the more special by the Paris 2024 Olympic and Paralympic Games, of which Air France is a proud official sponsor. We look forward to welcoming the world to France – athletes, delegates, supporters, and more – onboard our aircraft to celebrate the world’s largest event.”

The Bottom Line

Despite the very positive results, the market appears concerned about profit sustainability. “Concerns over aircraft availability and demand in some of its key markets, alongside stickier than expected inflation in Europe, have overshadowed what were some generally positive results,” said John Moore, senior investment manager at RBC Brewin Dolphin.  The capacity shortfalls and uncertainty over the Boeing 737 MAX 10 certification are of particular concern as demand has returned, but capacity hasn’t matched that growth.  

AF-KLM’s  CFO, Steven Zaat, stated, “The problem is not selling the tickets. We can sell every seat we want.”  The problem is capacity and obtaining aircraft to meet their capacity growth targets in an industry beset with supply-chain problems and certification delays.  IAG is remaining with the MAX 10 today but may shift to other products if additional certification delays cause the program to be much later.

Inflation, which has been persistent in Europe, is also leading to higher labor costs, which, combined with high fuel costs, are causing concerns for 2024 performance, compounded by geopolitical disruptions in the Middle East impacting traffic demand.

Despite records for revenues and profitability, the European airline groups have not yet reaped the rewards they were expecting from shareholders and the stock market amid supply chain, labor, aircraft, and geopolitical concerns.

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President AirInsight Group LLC

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