Third quarter revenue of €7.3bn was up 170% against 2021, and broadly flat against 2019 levels despite restrictions at Heathrow and widespread network closures in the Asia-Pacific region.
This was achieved with capacity running at 81.1% of 2019 levels, and that's expected to increase to 87% in the final quarter of the year.
Underlying operating profit of €1.2bn was in line with recently upgraded guidance. That's against a loss of €485m in the same period last year.
Net debt fell 5.2% to €11.1bn.
For the full year, assuming no change in exchange rates and fuel prices, the Group expects underlying operating profit of €1.1bn. It also expects 'significantly positive' net cash flow.
IAG reported continuing strength in demand but is "conscious of the uncertainties in the economic outlook and the ongoing pressures on households".
The shares were broadly unmoved following the announcement.
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Our view
We're the first to admit we weren't expecting a third quarter upgrade from British Airways owner, IAG, just yet. Especially in the current climate. But it seems that pent up travel demand is currently trumping cost-of-living pressures.
Capacity's climbing towards normal levels too. IAG's recovery looks like it could be primed and ready for take-off.
If the group can squeeze more euros out of each additional passenger, the speed of recovery will be that much faster. That is a status quo we expect the group to be able to get back to, courtesy of its enormous cost saving and streamlining efforts over the last few years.
That said, for now, costs are soaring because of the rate at which it's ramping up capacity. We are cautiously optimistic that planes are now full enough per-trip that profits can find a sustainable path forwards.
Some of the short haul carriers have had to lower ticket prices to entice passengers, a trend that could materialise for long haulers as well. Stoking demand is important over the next year and price is one of the few levers IAG has to pull.
IAG's long haul recovery continues to lag that of shorter trips in Spain and beyond, with continued restrictions in large parts of Asia not helping the matter. On the upside, the lifting of passenger caps at Heathrow comes as some relief.
There's still a long journey ahead. And a very real risk that consumer behaviour is yet to fully adjust to a world of higher inflation and increased costs. If spending starts to rein in, we could see the strong forward order book come under pressure.
Our biggest concern for now is the group's eye-watering debt pile, which cost north of £400m in interest in the first half. The return of positive free cash flow helps, but shareholder distributions will take a backseat to debt management for a long time to come.
For now, it seems the worst is over for IAG and the current risks to demand look more like turbulence than a full stop. There's an opportunity for shares to rerate if more passengers come roaring back. But until we have hardened proof of full planes and a full schedule, there's an element of caution alongside our optimism.
IAG's key facts
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