British Airways owner IAG slashes flights after €1.3bn slump
International Airlines Group (IAG), the owner of British Airways, has slashed its flight schedule for the rest of the year as it reported a €1.3bn (£1.16bn) loss over the third quarter.
In an unscheduled trading update, the group said it was cutting flights between October and December to just 30% of normal levels, blaming the reintroduction of travel restrictions by many European governments.
The loss was significantly worse than analysts’ forecasts of €920m and compares with a profit of €1.4bn in the same period last year. Third-quarter revenues plummeted by 83% and the group – which also owns Iberia, Vueling and Aer Lingus – warned the capacity cutbacks meant it would no longer reach breakeven in terms of net cash flows during the fourth quarter.
In July, IAG raised €2.75bn to strengthen its balance sheet after reporting a record loss of €4.2bn over the first half as passenger numbers collapsed. Liquidity remained strong, it said on Thursday.
The results were the first to be published under the new chief executive, Luis Gallego, who took over from Willie Walsh in early September.
The group previously announced a reduction in flight capacity in September, but said bookings had since levelled off because of the measures implemented by European governments in response to a second wave of Covid-19 cases.
IAG called the current environment “highly uncertain” and said passengers were not booking flights as expected because of government restrictions, including local lockdowns and extension of quarantine requirements for travellers from an increasing list of countries.
The group has cut thousands of jobs at its airlines including Iberia and BA, where it sought to make 12,000 staff redundant as the pandemic took hold in the spring.
IAG complained that governments had not swiftly adopted initiatives to give people confidence to book or travel on flights, such as pre-departure coronavirus tests or arrangements for “air corridors” between countries, which allow passengers to travel without needing to quarantine.
Airport owners and British carriers, including BA, have called on the government for several months to allow the urgent introduction of coronavirus testing on passengers arriving at UK airports, warning that failure to allow this was weighing on the aviation industry and putting thousands of jobs at risk.
The UK’s first pre-departure coronavirus testing facility has opened at Heathrow, but the £80 test is only available to passengers flying from London to Hong Kong on airlines including BA, Virgin Atlantic and Cathay Pacific.
The tests must be pre-booked, and results will be available within an hour, a move that is seen as a significant breakthrough in demonstrating the possibility of clearing healthy passengers to travel and potentially ending quarantine rules.
BA has been pushing for trials of pre-departure testing between the US and UK, previously its most lucrative route but currently vastly reduced because of travel restrictions. The carrier retired its entire Boeing 747 jumbo fleet this year to cut costs with the drop in long-haul demand.
One of BA’s 747s has been saved from the scrapyard, it was announced on Thursday, and is returning homewards to Dunsfold aerodrome in Surrey for future use as a film set.