Coronavirus: British Airways owner hopes to revive flights in July

Image copyright
Getty Images

British Airways owner IAG has said it is planning for a “meaningful return” of flights in July at the earliest if lockdown measures are relaxed.

However, IAG – which also owns Iberia and Aer Lingus – said these plans were “highly uncertain”, and were subject to various travel restrictions.

IAG said it did not expect passenger demand, which has been hit by the pandemic, to recover before 2023.

BA is set to cut up to 12,000 jobs due to the collapse in business.

Willie Walsh, IAG’s chief executive, said: “We are planning for a meaningful return to service in July 2020 at the earliest, depending on the easing of lockdowns and travel restrictions around the world.”

He added: “We will adapt our operating procedures to ensure our customers and our people are properly protected in this new environment.”

Aircraft grounded

The group said it expected that passenger capacity would still only be half the usual level in 2020, despite some flights potentially resuming in summer.

Since late March, it has already fallen by 94%, with most of its aircraft grounded, it said.

The announcement came as IAG reported an operating loss of €535m (£466.6m) for the first three months of the year, marking a sharp reversal from a profit of €135m a year earlier.

In an attempt to shore up cash during the coronavirus crisis, the group said that it expected to defer deliveries of 68 aircraft.

It added that it expected the second quarter to be “significantly worse”.

Agony for airlines

As if there wasn’t already enough agony around for airlines, IAG’s first quarter results have revealed an unexpected additional financial sting.

The owner of BA, Iberia, Aer Lingus and Vueling has lost £1.3bn on fuel hedging, enough to push it into a statutory loss of nearly €1.7bn in the first quarter of the year. If you strip out hedging loss and other one-off costs, the loss was just €535m, compared to a €135m profit in the same period last year.

IAG’s statement does not give exact details of the hedging loss. But it is likely the company made advance purchases of fuel to have some certainty on fuel prices, either in the form of actual delivery contracts, or more likely through financial derivatives that have the same effect. Even though the airline is not flying, it will still be on the hook for the contracts.

Although the group is planning for a resumption of some services, it says it will still need to let go of many staff.

Many airlines have been struggling as the coronavirus pandemic has brought global travel to a virtual standstill.

Last month, BA said it was set to cut up to 12,000 jobs from its 42,000-strong workforce. It also told staff that its Gatwick airport operation might not reopen after the pandemic passes.

Image copyright
Getty Images

Image caption

IAG chief executive Willie Walsh will delay his retirement until September

IAG chief executive Willie Walsh had been due to retire in March, but will stay on until September “to focus on the immediate response to the crisis”.

Luis Gallego, head of the group’s Spanish division, Iberia, since 2014, will succeed him.

Source Article