IAG maintains the momentum of air freight in the 2nd quarter

Cargo activity declined in the second quarter at International Airlines Group, parent company of British Airways and Iberia, in line with the overall market easing due to inflation, pandemic shutdowns in China, the invasion of Ukraine and airport congestion.

The three-month period ending March 31 was nevertheless positive, as the company returned to profitability for the first time since the pandemic. The company made 113 million euros ($115 million), although it lost $665 million in the first half.

Group freight revenue fell 1.9% to $418.4 million, even with a 4.6% increase in tonnage from 2021, as shipment yields (-2% adjusted for fluctuations monetary) and billable distance were lower, the company reported on Friday. The most important metric of freight activity, freight tonne-kilometres (CTK), fell 5%, meaning IAG (CXE:IAG) moved freight on shorter routes and less lucrative.

Freight revenue by CTK, a measure of price, increased 3.3%.

Compared to 2019, freight revenues increased by 51.6%. Last year was historic for the air cargo industry, making year-to-year comparisons difficult.

For the first half of the year, cargo revenue grew 9.6%, although IAG airlines operated just 395 cargo-only passenger flights, compared to 2,677 in the first six months of 2021. The resumption of passenger travel and the large-scale restoration of passenger routes has provided more cargo capacity in aircraft holds, reducing the need to fly with temporary freighters. Yields rose 4.8% as supply chain disruptions continued to limit airlift capacity.

British Airways, Iberia and sister companies Vueling, Aer Lingus and Level do not have pure freighter aircraft.

IAG now offers more destinations in North America from London-Heathrow than before the pandemic. It recently opened new service to Portland, Oregon, from London, and new services to Dallas and Washington from its Madrid hub, while restarting service to Pittsburgh. Madrid now has eight more international destinations than in 2019.

IAG Cargo said it transported more than 3,300 tons of infant formula to the United States under the government’s Operation Fly Formula program to ease a domestic production shortage.

An extensive network of routes allows for greater global movement of goods, especially when flights connect to hub facilities.

“While the entire aviation sector is undoubtedly facing challenges, our results today show that our investments in expanding and digitizing routes are paying off,” said David Shepherd, Director CEO of IAG Cargo. “The return of global passenger travel is facilitating additional cargo capacity, our pre-pandemic schedules are returning and we are launching new routes for customers.”

In June, IAG Cargo began using Freightos’ new payment tool WebCargo, which allows freight forwarders who book shipments on the Freight Marketplace to also pay for freight in a single transaction.

IAG said passenger capacity ended the quarter at 78% of 2019 levels, up 65% from the first quarter. Passenger revenue performance increased by 10.6% compared to three years ago.

Performance continues to be affected by massive congestion at Heathrow and other European airports due to a lack of staff. IAG and other airlines have canceled flights and reduced schedules. Heathrow officials recently limited passenger numbers until the end of October so they could replenish ground staff.

The situation limited British Airways’ capacity at Heathrow to 69% in the quarter. The airline plans to increase its capacity to 75% in the current quarter.

CEO Luis Gallego said the company saw no signs of slack in passenger demand. The company released guidance for significantly improved adjusted operating profit in the third quarter and full-year profit.

Click here for more FreightWaves/American Shipper stories by ErIc Kulisch.


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