British Airways owner IAG is banking on the reopening of transatlantic travel to revive its business after warning it will lose another €3bn this year.
The group, which owns airlines including Iberia, Aer Lingus and Vueling, has racked up huge losses over the past 18 months while it has been shut out of its most lucrative north Atlantic market, in effect closed since early 2020.
But Luis Gallego, IAG’s chief executive, said Monday’s reopening of the US border to foreign nationals represents “a pivotal moment for our industry”.
IAG’s airlines plan to increase their flight schedules to 60 per cent of normal levels this quarter in response, up from the 40 per cent flown over the summer, which are typically the industry’s busiest months.
Looking further ahead, Gallego expects capacity on the north Atlantic routes to reach 90 per cent of pre-pandemic levels by next summer.
“We are pretty sure that if we can operate that amount of flights we will come back to profitability,” the Spanish executive said.
Gallego said long-haul bookings have recovered more quickly than short-haul, and reported “early signs of a recovery in business travel”.
Airlines have tried to encourage leisure travellers into their business and first class cabins while corporate travel has been quiet. Gallego said this strategy has worked well.
Analysts say that unlike low-cost rivals Ryanair and Wizz Air, which both returned to profit over the summer through flying across Europe, IAG will not be able to recover until its huge network of long-haul operations is back up and running.
IAG’s recovery this year has also lagged behind fellow flag-carriers Lufthansa, which reported a small profit in the third quarter, and Air France, which guided to positive full-year earnings.
Unlike those two continental carriers, IAG was not offered a government bailout during the crisis, although it has received state-backed loans through BA.
IAG instead tapped the debt and equity markets to build up a firewall of cash to see it through the crisis, and had access to €10.6bn of liquidity by the end of September.
As a consequence, like much of the airline industry, the company now has a huge debt burden to service.
IAG reported €12.4bn in net debt by the end of September, up from €7.5bn at the end of 2019.
The airline saw positive operating cash flow for the first time since the start of the pandemic in the third quarter, but still reported a €485m operating loss before exceptional items, compared with the €1.3bn lost the previous year.
The group forecasts a loss of approximately €3bn for the full year, slightly worse than analysts had forecast but an improvement on the €4.3bn lost last year.
Shares slipped 2 per cent to 166.33p by mid-morning, and are still trading about two-thirds below their pre-pandemic levels.
https://news.google.com/__i/rss/rd/articles/CBMiP2h0dHBzOi8vd3d3LmZ0LmNvbS9jb250ZW50LzM1YjM4OTBhLTkzZDMtNGRmNS04MDBiLWIyNjJhZDJiZDk4MtIBP2h0dHBzOi8vYW1wLmZ0LmNvbS9jb250ZW50LzM1YjM4OTBhLTkzZDMtNGRmNS04MDBiLWIyNjJhZDJiZDk4Mg?oc=5
2021-11-05 09:42:31Z
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