British Airways owner IAG nosedives into €1.3bn pandemic loss and cuts flights over winter
British Airways owner International Airlines Group (IAG) shares slide this morning after it cut its full-year outlook, as the airline reported further pandemic-related losses and announced more flight cuts for winter.
IAG, which alongside British Airways also owns Iberia and Aer Lingus, reported a €1.3bn (£1.2bn) loss for the three months to 30 September.
Shares are down more than 1.2 per cent to 99p in London.
The figure marks a significant slump for the airline group, which saw profits of almost €1.4bn in the same period last year, and came in far worse than analysts’ expectations of a €920m loss.
It comes after IAG saw quarterly revenue plunge 83 per cent to €1.2bn as flights remained grounded during the pandemic, compared to €7.3bn over the same period last year.
Planes stay grounded
IAG said it will cut flights planned for the rest of the year as quarantine measures spook travellers.
The group warned it would fly no more than 30 per cent of the capacity it flew in the same period last year over the next few months.
“Recent overall bookings have not developed as previously expected due to additional measures implemented by many European governments in response to a second wave of Covid-19 infections, including an increase in local lockdowns and extension of quarantine requirements to travellers from an increasing number of countries,” the company said in a statement.
“At the same time, initiatives designed to replace quarantine periods and increase customer confidence to book and travel, such as pre-departure testing and air corridor arrangements, have not been adopted by governments as quickly as anticipated.”
IAG said ongoing disruption to international travel meant it would no longer meet a key breakeven net cash flow target in the fourth quarter.
In July, the group raised £2.5bn in a bid to strengthen its balance sheet as passenger numbers collapsed during the coronavirus crisis.
In its first set of results under new chief executive, Luis Gallego, who took over from Willie Walsh in early September, IAG today said liquidity remained strong.
‘Waves of coronavirus’
“It looked for a moment like the worst may be behind the airlines,” said William Ryder, equity analyst at Hargreaves Lansdown.
“IAG has already lost billions of euros this year, but was expecting (or perhaps hoping) to breakeven on a cashflow basis in the final quarter.”
Ryder added: “Just how turbulent the future will be for IAG may depend on how many more waves of coronavirus we face. If this is it, and some combination of a vaccine, track and trace and partial herd immunity can prevent a third wave next year, IAG should come through, albeit badly scarred. On the other hand, if we’re beginning a pattern of rising infections, restrictions, remission, rejoice, repeat — IAG could be in real danger.”
It comes after British Airways joined a slew of UK airlines calling for more government support to weather further restrictions sweeping the globe amid a second wave of coronavirus.
Sean Doyle, who became British Airways chief executive last week, said the UK needed to get the economy going again but “this just isn’t possible when you’re asking people to quarantine for 14 days.”
“It’s our view that even if that quarantine period is reduced to say seven days, people will travel here and the UK will get left behind,” Doyle said in a keynote address at the Airlines 2050 conference.