Originally Posted by
bisonrav
The annual report and accounts show the BA passenger business is absolutely flat as a fluke. The overall top line has increased by inflation essentially, and even that isn't driven by passengers.
The main reason for the apparently good profit showing is a windfall on fuel. That looks like it's about to reverse, depending what happens in Iran and the Hormuz Straits. They're also seeing quite significant headwinds on catering and ground handling costs.
You probably ought to look more closely at the business excluding exceptional items. It's not particularly healthy. Tiermaggedon possibly hasn't been a disaster, but it certainly isn't a "resounding success". And IAG are downplaying the loyalty business which was the great hope for low capital growth and using a comparison with 9 years ago to indicate growth in that income stream (which is mostly BAH).
And even if they still have the same number of passengers and the same income, what they've done has removed a degree of guaranteed repeat business and injected an element of volatility into their customer base that wasn't there before. It's easier to make money consistently by relying on repeat business from loyal customers rather than either competing on price or (as they seem to be doing) relying on random purchases from folk who would be fine flying with any airline. We all know that super profits are made in the thing you sell at the margins - that extra 1% who wouldn't have bought but for.... ; or the extra hour of your time you can charge once you've already covered your costs - and that's what they have disrupted. It may not be huge in terms of turnover, but presumably was a profitable add on that may now not exist.