British Airways owners warn that business trips will not return to pre-pandemic levels

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British Airways Owner International Airlines Group warns that it does not expect business travel to return to pre-pandemic levels as it helped high-expenditure passengers record profits for the bumper.

Operating profit rose 22% in 2024 to a record 4.3 billion euros, it said as it outlined plans to return up to 1 billion euros to shareholders on Friday.

IAG, which owns five airlines, including Iberia in Spain and Aer Lingus in Ireland, said:

However, while the number of corporate travel used to fill premium seats was on the rise, the IAG said, “We estimate that it will not fully recover to levels before level 19, particularly due to short periods and short distance travel.”

The head of the Global Business Travel Association told the Financial Times last year that business trips have settled into a “new normal” where there are fewer day trips on flights due to online video meetings.

Companies, including professional services firms PWC, EY and Marsh McLennan, also outline all plans to reduce emissions by reducing air travel.

Since the end of the pandemic, British Airways and other major airlines have been able to fill business and top-notch seats with leisure passengers willing to pay a higher price instead.

Sean Doyle’s CEO said BA’s premium seats had not been more fulfilling than they had in the past seven months, and the airlines were “very successful in developing the premium leisure market.”

He said there were several bright spots in the on-site market, especially among high-tech and financial companies. “Our premium cabins are very full. The demand is strong. … (But) the travel combinations are different,” he said.

IAG’s stock price has more than doubled in the past year as investors have supported a strong quarterly financial results built on high demand for travel, particularly on key routes for the group across the Atlantic.

The IAG says it wants to further expand its South Atlantic route by purchasing taps from Portuguese airlines, which are scheduled to be privatized by the government this year.

IAG CEO Luis Gallego said the company had consulted with the Portuguese government but that terms of the transaction were important, including whether the state invested in the airline.

IAG has purchased airlines entirely in the past.

“For us, it’s important to be able to manage the companies we have in our group,” Gallego said.

IAG also said it plans to return up to 1 billion euros this year to shareholders in “excess capital.”

He also said he would pay a 2024 dividend of 0.09 euros per share after reviving its interim dividend last year.

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Operating profit in BA rose 14% year-on-year to 2 billion euros as airlines were boosted by strong demand for “very valuable” routes in the UK and the US.

Airlines have been suffering from long operational issues since the end of the pandemic, particularly at London’s Heathrow Airport hub.

The IAG said the BA improved its operational performance in 2024, but warned that the airline is facing “continuous challenges related to aircraft availability,” particularly a fleet of Boeing 787 jets with issues with Rolls-Royce engines.

IAG shares rose 4% in afternoon trading in London, up 131% over the past year.