European airline groups IAG and Air France-KLM each reported record third-quarter operating profits on Friday (27 October), following a busy summer season and increased demand across transatlantic routes.

IAG, which owns British Airways, Iberia, Aer Lingus and Vueling, reported a 39 per cent year-on-year rise in quarterly operating profit before exceptional items to €1.7 billion, while Air France-KLM posted a 31 per cent increase in profit to €1.3 billion.

IAG’s overall capacity for the quarter increased 17.9 per cent on 2022, while passenger unit revenue increased by 2.2 per cent year-on-year.

British Airways reported a 20 per cent increase in quarterly revenue and capacity growth of 25 per cent, driven by strong leisure demand. Profits increased by 50 per cent year-on-year as the UK flag carrier continues to restore its international network “despite a challenging external environment and supply chain constraints”.

Aer Lingus total revenue increased by 16 per cent, with an operating profit margin of 25.5 per cent. Premium leisure demand across the carrier’s transatlantic network was “particularly strong”, with record load factors in business cabins. 

Iberia posted a 19 per cent profit increase, with capacity growth of 18 per cent and passenger unit revenue growth of 5 per cent, with corporate travel “mainly recovered to pre-Covid levels”.

Vueling delivered a ‘record’ operating profit of €282 million for the quarter, with a load factor of 94 per cent and ancillary revenue of €29 per passenger. 

“During the third quarter we saw sustained strong demand across all our routes, in particular the North and South Atlantic and in all leisure destinations around Europe,” said IAG CEO Luis Gallego. “We continue to develop our hubs of Barcelona, Dublin, London and Madrid, supported by our fleet deliveries and future orders. 

“Our strong financial performance is enabling investment in our people and allowing us to further improve customer experience. At the same time, we will keep working towards our sustainability goals,” he added.

Meanwhile, third-quarter capacity for Air France-KLM reached 94 per cent of 2019 levels, with load factor at 90 per cent. Group revenue saw a 7 per cent year-on-year increase to €8.7 billion as Air France-KLM welcomed 26.9 million passengers between July and September, a 7.6 per cent increase on the previous year. 

Transatlantic demand was particularly strong, with yield increasing by 6 per cent at a same capacity and load factor level (91 per cent). Transatlantic corporate traffic stood at 80 per cent of 2019 levels.

Air France reported a 7.5 per cent increase in revenue to €5.4 billion and an operating profit of €806 million – up €236 million compared to last year – largely driven by strong long-haul demand. While medium-haul demand for the French carrier remained “stable”, domestic capacity fell by 18 per cent. As a result, the carrier recently announced a reshuffle of its domestic services. 

KLM’s revenue grew by 5.9 per cent to €3.4 billion, with a profit of €539 million following “improved operations”, however the carrier stated these are “not optimal yet”.

Commenting on the results, group CEO Benjamin Smith said: “Air France-KLM delivered a solid quarter, marked by remarkable results. This performance was driven by strong summer demand.”

Throughout the quarter, the group made “significant progress” on its sustainable roadmap following a ‘landmark’ order for 50 fuel-efficient Airbus A350 aircraft for its long-haul fleet. The group also initiated the process to acquire a maximum 19.9 per cent non-controlling stake in Nordics carrier SAS.

“By investing in SAS, we intend to enhance our offer and connectivity in the Nordics,” Smith added. 

The full-year 2023 outlook for both IAG and Air France-KLM remains unchanged, with full-year capacity expected to reach 96 per cent and 95 per cent of pre-Covid levels, respectively.