The owner of British Airways, Irish airline Aer Lingus and Spanish carrier Iberia has landed a record third-quarter operating profit, thanks to a bumper summer.
International Airlines Group made an operating profit of €1.7 billion ($1.79 billion) in its third quarter, up 43 per cent on the same period last year.
That translated into an after-tax profit number of €1.23 billion in the third quarter, a 44 per cent rise on last year.
Total revenue increased across all of IAG's airlines in the third quarter, with British Airways, Aer Lingus and Iberia growing at 20 per cent, 16 per cent and 19 per cent, respectively.
Stronger balance sheet
There was a significant strengthening of the balance sheet as IAG reduced its gross debt by €2.4 billion to €17.2 billion by the end of September this year
Bookings for the fourth quarter are as expected, IAG said, and 2023 is predicted to be year of “strong recovery” for the company, as it flies back towards pre-coronavirus capacity levels.
“This quarter represents a record third-quarter performance for IAG,” said IAG chief executive Luis Gallego.
“This is allowing us to invest in the business and reduce a significant amount of our debt.
“During the third quarter, we saw sustained strong demand across all our routes, in particular the North and South Atlantic and in all leisure destinations around Europe.
“We continue to develop our hubs of Barcelona, Dublin, London and Madrid, supported by our fleet deliveries and future orders.”
Mr Gallego noted that it was too early to tell if the business would be affected by the Israel-Hamas conflict.
The rise in the price of oil had caused some concern among airline analysts, but IAG's chief financial officer Nicholas Cadbury said the company was “well-hedged on jet fuel into Q1 [the first quarter] and Q2 [second quarter] of next year”.
Analysts felt much of IAG's strong performance was down to customers continuing to spend money on travel experiences, despite the rise in the cost of borrowing in the major economies.
But with interest rates set to be higher for longer, how long that spending continues is a matter for debate.
“A pivot has taken place in the travel sector since the pandemic, in terms of its importance to consumers, but that doesn’t mean we aren’t going to see knocks to performance – especially for the long-haul carriers like IAG,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
“Further information on how next year’s summer bookings are shaping up will be the most important barometer in understanding how far the current round of consumer confidence can carry this aviation giant.”
ONCE UPON A TIME IN GAZA
Starring: Nader Abd Alhay, Majd Eid, Ramzi Maqdisi
Directors: Tarzan and Arab Nasser
Rating: 4.5/5
Sam Smith
Where: du Arena, Abu Dhabi
When: Saturday November 24
Rating: 4/5
Museum of the Future in numbers
- 78 metres is the height of the museum
- 30,000 square metres is its total area
- 17,000 square metres is the length of the stainless steel facade
- 14 kilometres is the length of LED lights used on the facade
- 1,024 individual pieces make up the exterior
- 7 floors in all, with one for administrative offices
- 2,400 diagonally intersecting steel members frame the torus shape
- 100 species of trees and plants dot the gardens
- Dh145 is the price of a ticket
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
The specs: 2018 Jeep Compass
Price, base: Dh100,000 (estimate)
Engine: 2.4L four-cylinder
Transmission: Nine-speed automatic
Power: 184bhp at 6,400rpm
Torque: 237Nm at 3,900rpm
Fuel economy, combined: 9.4L / 100km
Desert Warrior
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
