International Airlines Group (IAG) has reported operating profits of €3,015 million before exceptional items for 2017. IAG are the owners of British Airways, Aer Lingus, Iberia, Vueling and Level.
After tax and before exceptional items, the profits total €2,243 million which is a very good result. Consolidation is clearly paying off, but how did each airline do?
Breaking Down The Profits
The majority of the profit was generated by British Airways, accounting for almost €2 billion of the €3 billion total. Clearly the efficiency gains put in place under CEO Alex Cruz are continuing to be successful.
Iberia contributed €376 million, less €180 million in exceptional costs due to restructuring which brings it down to €196 million. Aer Lingus goes from strength to strength with a total contribution of €269 million which has to be one of their best ever. Vueling contributed €188 million.
What About Level?
IAG’s new carrier Level is in its initial period of operations. According to Flight Global, the figures are not above the threshold that would make reporting the numbers mandatory.
This is the same for Avios, which is also controlled by IAG. Together these two units accounted for €186 million of the profit though it’s unknown whether one is profitable and one is not or if both are profitable.
Time To Invest In The Product?
With all that money floating around, passengers would like to think there would be investment in the product. British Airways have already announced better catering in World Traveller and improvements to Club World are apparently on the way.
Adding seats to the cabins and possibly removing things such as the Club Europe middle seat tray are ominous signs that the cost cutting continues apace. This is at a time when the lounges for the airlines are looking old and the on board hard product is getting tired. Lagging behind other carriers will make it more difficult to catch up in future.
Airline profitability continues to confound as the industry is well overdue for a downturn based on past cycles. Perhaps this is the new normal and constant cost control will mean constant profits for an industry historically hard pressed to make money.
What do you think of these profits? Should they all go to shareholders or should passengers see some improvements? Thanks for reading and if you have any comments or questions, please leave them below.
Featured image via The Diplomat In Spain.