British Airways has returned to profit for the first time since the start of the pandemic, with its owner International Airlines Group saying demand was strong despite “historic challenges” still facing the industry. IAG said that there was no sign of bookings tailing off in the autumn and beyond – in the face of pessimistic forecasts from its main airport base, Heathrow – and that demand for the most lucrative transatlantic routes was continuing to grow. The group, which includes Iberia, Vueling and Aer Lingus, made an operating profit of €293m (£245m) between April and June, compared with a €967m loss during the same period last year. BA’s contribution, a €54m operating profit, was the first time the UK flag carrier had recorded positive results since 2019, and came despite soaring oil and employment costs. The group said the “challenging operational environment at Heathrow” had meant BA’s capacity had been limited to 69.1% of pre-pandemic levels between April and June, up from 57.4% in the previous quarter. The airline, which has cancelled tens of thousands of flights this summer due to the labour shortages across aviation, plans to increase its capacity to about 75% between July and October. IAG’s plans for overall passenger capacity are about 80% between July and October, and 85% for the final quarter of the year – a 5% cut for the second half of 2022 compared with previous guidance, which it said was “mainly due to the challenges at Heathrow”. The IAG chief executive, Luis Gallego, said: “In the second quarter we returned to profit for the first time since the start of the pandemic following a strong recovery in demand across all our airlines. “This result supports our outlook for a full-year operating profit. Our performance reflected a significant increase in capacity, load factor and yield compared to the first quarter. “Premium leisure remains strong while business travel continues a steady recovery in all airlines.” Gallego said that there was no sign that demand was weakening despite the “historic challenges” now facing the industry. Others, notably Heathrow airport, have forecast that the industry would start losing custom after this summer’s post-Covid rebound. Advertisement “Forward bookings showed sustained strength and north Atlantic demand continues to grow. Bookings in the fourth quarter show no signs of any weakness in demand,” Gallego said. The published half-yearly accounts showed that pay for IAG’s board of directors had risen from €1m to €2m for the first six months of the year, rounded to the nearest million euros. IAG refused to disclose whether directors had had a pay increase but a spokesperson said the figure in 2021 had been just under €1.5m, and the rounded figures included an “adverse foreign exchange adjustment”. They said IAG would disclose the precise numbers in its full year report. The questions over directors’ pay have come at a time when pilots are threatening a strike ballot over salaries that were cut during the pandemic and have yet to be restored to 2019 levels. BA has yet to entirely resolve a dispute with the Unite and GMB unions over ground handlers’ pay although strikes called during the summer period have been suspended pending a vote on an improved pay offer. The BA chief executive, Sean Doyle, did not rule out more disruption this summer from industrial disputes, but said the airline had made a “very fair” offer to Unite and GMB. He said the airline was in discussions with pilots, adding: “We have different circumstances and starting positions for all of our work groups. We will work through and engage with our pilots in the coming days and weeks.”