IAG Returned to Profitability – What to Expect in its Q1 Results

After a dismal few years for airlines during Covid, 2022 saw a much needed recovery in travel, with certain airlines such as International Consolidated Airlines (LON: IAG) almost reaching their pre-pandemic levels.

IAG, which is one of our three stocks to watch this week, was able to report its first annual profit since the pandemic and remained confident for the year ahead. Operating profit grew to €1.22 billion in 2022, following a loss of €2.97 billion in 2021. The airline owner reports its Q1 results on 5 May, but what can investors expect?

The group sees a further recovery in profits in 2023, with operating profit anticipated to be in the range of €1.8 and €2.3 billion. Despite the macroeconomic uncertainty, IAG expects full year capacity of approximately 98% of 2019 levels, with Q1 approximately 96% of Q1 2019.

Luis Gallego, CEO of IAG, commented on its strong recovery in 2022, but also mentioned its “robust forward-bookings” which has kept the business confident despite the challenging market conditions.

The group also plans to add to its airline portfolio, after acquiring Air Europa in February, to grow Madrid as a hub and build its gateway to Latin America.

The airline owner has shown strong growth over the last year, which is expected to continue in Q1 and 2023. However, investors will be sure to watch out for IAG’s net debt, which came down to €10.38 billion at the end of 2022. Its debt still remains significantly high and has kept investors mindful of its shares.

IAG shares are currently up 20% so far this year, but remain far below pre-pandemic levels.

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