British Airways owner IAG cautious on short-term flying recovery

Monday, 10 May 2021 00:00 - - {{hitsCtrl.values.hits}}

A British Airways plane taxis past tail fins of parked aircraft near Terminal 5 at Heathrow Airport in London - Reuters

LONDON (Reuters): British Airways-owner IAG on Friday forecast only a minimal pick-up in capacity to 25% for the April to June quarter, remaining cautious despite hopes that European travel will start to recover from late May onwards.

The rise to 25% of 2019’s capacity puts IAG’s plans behind those of competitor airlines and compares to the 19.6% of the capacity that it flew in the January to March quarter as the coronavirus pandemic continued to restrict travel.

IAG Chief Executive Luis Gallego said in a statement the airline was “ready to fly but government action is needed”.

He called for travel corridors to open between countries with high vaccination rates, such as the United Kingdom and the United States.

Britain is set to publish later on Friday its “green list” of low-risk places where people can travel from 17 May without needing to quarantine on their return home, but reports suggest that just a handful of countries will make the list.

IAG’s capacity plans put it behind Air France-KLM, which said on Thursday it expects to operate 50% of its pre-pandemic flight capacity in the second quarter. Lufthansa last week cut its capacity to forecast to about 40% of its pre-pandemic capacity for 2021. European airlines hope that by July, much of the continent will be open for travel, meaning bookings will rise and they can ramp up capacity to start repairing their COVID-19 battered finances.

Minimal flying in the January to March quarter, resulted in IAG posting an operating loss before exceptional items of EUR 1.14 billion, slightly better than the EUR 1.17 billion loss forecast by analysts.

IAG, which also owns Iberia and Vueling in Spain and Aer Lingus in Ireland, said it reduced weekly cash burn to EUR 175 million, a better performance than the EUR 185 million a week it had previously guided for the period.

The group also said it had strong liquidity of EUR 10.5 billion at the end of the first quarter. Given the ongoing uncertainty over COVID-19, IAG said it could not provide profit guidance for 2021.