- Passenger numbers: 2.1 million, -24.5% year-on-year;
- Passenger load factor: 76.6%, -1.5 ppts;
- UK/Europe: 69.5%, -3.0 ppts;
- Trans-Atlantic: 79.5%, -0.2 ppt;
- Asia Pacific: 80.3%, -2.5 ppts;
- Africa & Middle East: 74.7%, -2.2 ppts;
- Cargo traffic (FTKs): -11%. [more]
British Airways pax down 24.5% in Apr-2010
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Iberia: capacity stabilises. IAG focuses growth on Level, its new long haul LCC
Iberia's 'Plan de Futuro' restructuring restored its profitability in 2014 and it achieved its third straight positive operating result in 2016. Its owner, IAG, rewarded it with a return to capacity growth after years of cuts and new aircraft orders. Iberia's improved returns, and a drop in performance by sister airline Vueling, lifted it from the bottom of the IAG pack in 2016.
Nevertheless, Iberia is still not earning its cost of capital and is some way short of IAG's even higher target return. Iberia's capacity growth is slowing, as it concentrates more on load factor gains in a market characterised by overcapacity. Seat numbers are levelling off in its key long haul market of Latin America, although there is some growth in North America and the 2016 launches of Shanghai and Tokyo routes will feed through to growth in NE Asia this year. In Europe, Iberia is also maintaining flat capacity in the face of rapid LCC expansion.
The second phase of 'Plan de Futuro' targets further margin expansion, but Iberia may have a bigger challenge taking the next step upwards than it did to restore profits. Meanwhile, IAG's growth focus has shifted to its new long haul low cost operator Level.
IAG faces challenge to maintain momentum in financial performance
IAG is arguably the most financially focused European airline group in terms of the way it motivates and monitors its own performance. It is no coincidence, then, that its financial performance is now consistently stronger than that of the Lufthansa Group and Air France-KLM (although none are as profitable as the leading LCCs, such as Ryanair). IAG's financial discipline is helping to rehabilitate the airline sector's reputation with professional investors.
In 2016 IAG achieved an operating margin and return on invested capital that were, once more, its best ever. This marked its strong recovery in the years since the global financial crisis (which hit it hard), and consolidated its leadership among Europe's big three legacy airline groups. Only Vueling among the group's constituent airlines suffered from falling returns. IAG shareholders are to be rewarded with a share buyback (IAG's first, and still rare among European airlines) and an increased dividend.
However, by its own standards of success, IAG has more to do. It is not yet meeting its own margin and return on capital targets –partly because it likes to increase them when they come within reach. Its challenge will be to maintain its momentum as the airline cycle's upswing starts to fade.