Heathrow closure cost British Airways owner £40m
The closure of Heathrow airport in March had a “severe impact” on the owner of British Airways and cost the group tens of millions of pounds in lost profit.
International Airlines Group (IAG), which also owns the likes of Spanish carrier Vueling and Ireland’s Aer Lingus, said the blaze that brought operations at London’s flagship hub to a halt for nearly a day cost the airline £40m – or €70m – in the first half of this year.
The disclosure is the first time the aviation juggernaut revealed to investors the exact toll the electrical fire will have on its bottom line.
IAG was among the worst affected airlines by the high-profile fire that broke out on the night of 21 March at a nearby substation and disrupted more than 270,000 customer journeys.
Over 820 British Airways flights pass through the airport every day, and the airport’s Terminal 5 is entirely devoted to journeys with the UK’s flagship carrier.
IAG’s share price fell by as much as 24 per cent in the weeks following the controversial disruption, but has mounted a major recovery in the months since despite other major disruptions.
Airlines across the world were forced to cancel and reroute flights when Israel and the US exchanged air strikes with Iran in June. The group’s carriers are still not operating flights to and from Tel Aviv, IAG said, and it briefly stopped flights to destinations in the Gulf at the height of the tensions.
‘Structural shift’ to travel boosts British Airways owner
The group’s leadership also highlighted “Heathrow Airport baggage system failures” as having had an adverse impact on its performance.
IAG reported better than expected interim results on Friday despite these disruptions. Buoyed by lower fuel prices and the persistently strong demand for recreational travel since the pandemic, revenue rose eight per cent year on year to €15.9bn (£13.7bn).
Profit rose over 40 per cent €1.9bn, which the firm said was driven by “revenue, fuel and foreign exchange benefits”.
“We continue to benefit from the trend of a structural shift in consumer spending towards travel, IAG boss Luis Gallego said. “We remain focused on our market-leading brands and core geographies, where we continue to see robust performance, allowing us to invest in fleet.”
But in an otherwise positive update, the FTSE 100 constituent cut its projection for capacity growth for the rest of the year due to concerns around air traffic control and aircraft reliability. It now expects a capacity increase of roughly 2.5 per cent, down from the three per cent it had previously estimated for the year.