The aviation sector is now flying at cruising altitude on pent-up demand after emerging from the dark days of Covid, which sparked lockdowns and grounded airlines
The aviation sector is now flying at cruising altitude on pent-up demand after emerging from the dark days of Covid, which sparked lockdowns and grounded airlines AFP

Europe's aviation industry extended a bounceback from the Covid pandemic on Thursday, as British Airways owner IAG and Franco-Dutch rival Air France-KLM posted bumper 2023 profits.

The sector is now flying at cruising altitude on pent-up demand after emerging from the dark days of Covid, which sparked lockdowns and grounded airlines, sparking thousands of job cuts.

IAG, which owns also Spanish carriers Iberia and Vueling among others, said its net profit surged six-fold last year, boosted by "strong" demand particularly from leisure travellers, while it also hired 13,000 new staff.

Profit after tax jumped to 2.7 billion euros ($2.9 billion) in 2023, IAG said in a results statement, adding that revenues leapt by almost a third to 29.5 billion euros.

IAG noted that "strong growth" was "underpinned by robust and sustainable demand".

Air France-KLM announced that net annual profit soared almost a third to a record 934 million euros, while revenues jumped 14 percent to an all-time peak of 30 billion euros.

The carrier was also lifted by "sustained demand" in a "strong" performance, despite operational difficulties and fallout from the Israel-Hamas conflict.

However, its share price tanked nine percent in Paris as annual profit fell short of expectations after it logged a fourth-quarter loss. IAG shares slid 0.8 percent in London.

"People always want to travel and Covid curbs only served to create greater demand -- in spite of cost pressures which have taken a toll on consumer budgets," said Danni Hewson, head of financial analysis at stockbroker AJ Bell.

"Europe's aviation sector is enjoying blue skies and at the moment the outlook for 2024 appears relatively cloud free," she told AFP.

Covid caused Air France-KLM to lose a cumulative 10.4 billion euros in 2020 and 2021, forcing the group to carry out two recapitalisations and request help from the French and Dutch governments.

Over the same period, IAG logged net losses totalling also about 10 billion euros.

IAG chief executive Luis Gallego on Thursday said the group last year recovered "capacity to close to pre-Covid levels in most of its core markets".

The group said it was 92-percent booked for the first quarter of 2024 and 62-percent booked for the first half, ahead of last year's performance.

Air France-KLM said booking rates for the first half were similar to those at the same time last year.

IAG also unveiled a management reshuffle Thursday, including the appointment of Vueling chief executive Marco Sansavini as head of Iberia.

"Air France-KLM and IAG provide encouragement for those hoping for a resurgence for the beleaguered aviation industry," said Scope Markets analyst Joshua Mahony, while cautioning over persistent high inflation that ramps up airlines' costs.

He added that some carriers would struggle to meet booming demand with limited capacity -- and as the world's biggest planemakers struggle to produce enough jets.

"Unfortunately, many airlines will likely struggle to fully address the demand evident within the industry, with both Boeing and Airbus struggling to keep up with order backlogs that continue to grow," he told AFP.

Ryanair chief executive Michael O'Leary last week blasted a "debacle" at US planemaker Boeing, adding that the no-frills Irish carrier would seek compensation for flight cancellations caused by quality issues and production delays.