International Airlines Group (IAG), which owns British airways, the U.K.’s second largest airline by passenger numbers, fell far short of analysts’ expectations on Thursday as it recorded a loss of $1.5 billion (1.3 billion euros) in the third quarter and announced further cuts to its schedule amid a severe drop in demand for air travel.
Losses at IAG flew below forecasts of $1.1 billion (920 million euros) to report a 1.3 billion loss.
Revenue was down 83%, from $8.6 billion (7.3 billion euros) this time last year, to $1.4 billion (1.2 billion euros) in the three months to the end of September.
IAG blamed a rise in local lockdowns for impacting bookings as several of its key markets face a surge in new infections, while it added that governments had not adopted air travel corridors or new measures to replace quarantine periods as quickly as it had hoped.
The group, which earlier this year was forced to cut 94% of its flights at the height of the first wave of the pandemic, now says it will operate up to 30% of its 2019 capacity in the fourth quarter, lower than the 40% that they had hoped.
But the group said liquidity remains strong, adding it had raised 2.74 billion euros in early October, helping it to maintain a strong pot of cash likely totalling 9.3 billion euros ($11 billion).
IAG shares were down almost 2% on Thursday morning.
IAG previously said it does not expect passenger demand to return to pre-pandemic levels until 2023. Like many global air travel firms, the group was severely hit by coronavirus restrictions introduced earlier this year and forced to dramatically slash the number of flights it operated during the first wave of the virus. As of May, the firm, which also owns Iberia, Spain’s flagship airline, budget airline Vueling and Ireland’s flagship airline Aer Lingus, had received some $1.45 billion in government support from the U.K. and Spain. Industry veteran Willie Walsh, who stepped down as IAG CEO in September with ex-Iberia CEO Luis Gallego taking over, recently warned that the coming months would be “very tough” for the industry and that it would “never go back to the way it was”, but added that he foresees airlines becoming more efficient.
British Airways announced over the summer that it would press ahead to cut almost a third of its workforce—or 12,000 jobs—to offset the pandemic-induced downturn.
Source: Forbes – Business