by British Airways owner International Airlines Group (IAG) said it remained “concerned” about Heathrow’s preparation for the summer, despite assurances from the airport, as travel continues to recover for a second year.
Airlines have been forced to cut flights and cap passenger numbers at the UK’s biggest hub in the 2022 peak season, and although Heathrow has said it will not introduce a similar cap this year, chiefs of IAG and BA said the UK’s biggest airport was the demand underestimated.
Luis Gallego, IAG chief executive, said: “We’re worried about Heathrow, you know, because we have strong demand.
Related: Heathrow says the CAA made a mistake by lowering landing fees
“We have all the resources needed to run the capacity in our summer timetable. But to be honest, I think aviation, as we always say, is an ecosystem and we need everyone to do what they have to do.”
BA chief Sean Doyle said Heathrow underestimated passenger numbers by 10 million in 2022, causing disruption. He said: “The problem with underestimating volume is that you don’t plan properly. So I think we need to have a very realistic forecast of recovery and the resources to match. British Airways is doing it and everyone else should too.”
The latest warnings came amid a dispute over the level of landing fees set by regulator CAA, which Heathrow this week denounced as “wrongly done”. Heathrow chief executive John Holland-Kaye said airlines like BA were making huge profits and raising fares while the airport continued to report losses.
IAG rebounded on Friday to profit of 1.25 billion euros (£1.1 billion) in 2022 and said the number could almost double in the coming year as leisure and business travel continue to slump from the coronavirus pandemic recover.
The group posted losses of nearly £11bn through 2020 and 2021.
However, Doyle dismissed Heathrow’s account of their relative financial situation, saying the London hub should “throw a few facts on the table”. He said despite the headline losses, the airport’s operating profit is now at 76% of 2019 and charges are now at £31 per passenger. “All we’re seeing is that Heathrow has recovered ahead of the airlines in terms of their finances.”
IAG confirmed it would not pay dividends for 2022 or 2023.
Gallego said that for the group, whose other airlines include Spanish airline Iberia, 2022 was “a year of strong recovery, driven by sustained leisure demand and the reopening of markets”.
“At this point in the year, we continue to see robust forward bookings but are also mindful of global macroeconomic uncertainties,” he said.
IAG forecasts an operating profit of between 1.8 and 2.3 billion euros for this year. It also announced a €400m deal to acquire Air Europa outright, the Spanish regional airline it has been trying to buy for a number of years.
The group said capacity last year reached 78% of pre-Covid levels – in the most recent quarter 87% of 2019 levels – with a strong recovery in the holiday market, while business travel is “steadily improving”.
However, as the war between Russia and Ukraine pushed up oil prices, the company said aviation fuel unit prices rose 30% compared to 2019, with costs rising year-on-year from €1.78 billion to 6. €1 billion have increased.
The total costs for IAG have almost doubled between 2021 and 2022 from €11.2 billion to €21.8 billion. Despite the jump, Gallego said the airline group remains confident of returning to pre-Covid-19 operating profit levels within the next few years.
“As a long-haul specialist, IAG was one of the last names in the industry to gain momentum post-pandemic,” said Sophie Lund-Yates, the senior equities analyst at Hargreaves Lansdown.
“Of course, aviation has flown straight into another hurdle in the form of a livelihood crisis. So far pent-up travel demand seems to be keeping things going, but there is a limit to how long this can last.”
