BA owner IAG posts record £6.5bn loss

iag results 2021

The huge cost of the global pandemic on the airline sector has been revealed in today’s full year results from British Airways‘ owner IAG, as it reported a record full year loss of £6.5bn (€7.4bn).

Passenger capacity in the last quarter of the year was only 26.6% of 2019 levels and for the full year was 33.5% of 2019 and continues to be adversely affected by the COVID-19 pandemic, together with government restrictions and quarantine requirements, the airline group said.

The FTSE 100-listed company said that current passenger capacity plans for the first quarter of 2021 are for around 20% of 2019 capacity, but it said this remains uncertain and subject to review.

IAG offers no guidance for 2021

International Consolidated Airlines Group also said it was not making any estimates about its performance for the year ahead: “Given the uncertainty on the impact and duration of COVID-19, IAG is not providing profit guidance for 2021”.

Much of the company’s loss though was also down to a pre-tax charge of just over €3bn on fuel and discontinuance of foreign exchange hedging, as well as aircraft value writedowns and restructuring costs.

As well as British Airways, IAG also operates Iberia and Aer Lingus, Vueling and low cost airline LEVEL.

“Our results reflect the serious impact that COVID-19 has had on our business”, said Luis Gallego, IAG’s Chief Executive Officer.

“We have taken effective action to preserve cash, boost liquidity and reduce our cost base. Despite this crisis, our liquidity remains strong. At 31 December, the Group’s liquidity was €10.3 billion including a successful €2.7 billion capital increase and £2 billion loan commitment from UKEF. This is higher than at the start of the pandemic.

“In 2020, our capacity decreased by 66.5% while our non-fuel costs went down 37.1% thanks to the extraordinary effort across our business. The Group continues to reduce its cost base and increase the proportion of variable costs to better match market demand. We’re transforming our business to ensure we emerge in a stronger competitive position.

“I would like to thank our employees across the Group for their remarkable commitment, resilience and flexibility through this crisis.

Adapting quickly

“They have adapted quickly to new ways of working and made big sacrifices in terms of salary and working time. Our people have played a central role in all we have achieved during these challenging times.

“The aviation industry stands with governments in putting public health at the top of the agenda. Getting people travelling again will require a clear roadmap for unwinding current restrictions when the time is right.

Call for common virus testing

He also called on Governments to co-operate on common testing procedures in order to get its planes, its staff and customers flying again.

“We know there is pent-up demand for travel and people want to fly. Vaccinations are progressing well and global infections are going in the right direction.

“We’re calling for international common testing standards and the introduction of digital health passes to reopen our skies safely.”

The shares were up around 4% on Friday morning at £1.91 as investors digested the news and seemed encouraged by the airline group’s cash reserves.