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British Airways owner IAG says demand for air travel is unlikely to fully recover before 2023.
International Airlines Group, which also owns Iberia, Aer Lingus and Vueling, said its total operating loss in the three months to the end of September was 1.9 billion euros (1.7 billion pounds sterling), including exceptional items such as coverage. fuel and restructuring costs.
During the first nine months of the year, the group had a loss of € 5.6 billion (£ 5.1 billion) after tax and exceptional items, compared to a profit of € 1.8 billion (£ 1.6 billion) on the same last year’s period.
Many British Airways planes do not fly because the pandemic continues to restrict travel demand.
Luis Gallego, who took over as CEO of IAG in September, said the results “demonstrate the negative impact of COVID-19“but he also blamed” ever-changing government restrictions. “
Gallego said restrictions, such as the quarantine for travelers coming to the UK from certain countries, “create uncertainty for customers and make it difficult to effectively plan our business.”
He joined others, such as Heathrow Chief Executive John Holland-Kaye, in calling on governments to introduce pre-departure and possibly post-flight tests to reduce the need for quarantine.
“This would open routes, stimulate economies and make people travel with confidence,” he added.
“When we open routes, there is a pent-up demand for travel.
“However, we continue to expect it to take until at least 2023 for passenger demand to recover to 2019 levels.”
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IAG said there were “no immediate signs of recovery” from the pandemic, adding that it expects capacity in the fourth quarter to not exceed 30% of what it was at the same time last year.
The group said it has reduced cash operating costs by 54% and Gallego said “significant progress” had been made in the restructuring. Staff has been cut by 10,000 and most jobs have been lost at BA.
Aviation analyst Sally Gethin said IAG retains access to “incredible amounts of cash or liquidity” that would help it weather the coronavirus pandemic.
She told Sky News: “If we look at how much she has bled already this year, that shows how they can survive for a couple more years in the future, which sounds amazing.
“They are the big network operators … they all have greater access to cash. Governments are bailing them out, some of them are being nationalized, so they have this advantage in the future.
“But they are the low-cost airlines that we rely on here in Europe; some of them are going through a much more difficult time. It depends on their efficiency, how quickly and how quickly they can adapt to this rapidly changing market.” .
Gethin said the average airline could survive 8.5 months on cash reserves, but “erratic” travel restrictions and a lack of COVID testing in the industry were among the challenges.
“We are seeing a large number of victims,” he added. “There have been around 20 airline failures since the pandemic broke out and about half of them are in the administration – in other words, they find ways to survive.
“We will surely see more of these as time goes on and we are on the defensive with the pandemic.”
When asked whether governments should focus state aid on smaller carriers, he said: “Not everyone expects or wants to apply for state aid, which often comes with strings attached.
“Low-cost carriers are partly used to operating on low margins anyway. Some would like that support, but others not always. What many of them want to see is state aid as a solution that will be reduced by across the industry to create a more level playing field. “
During the night, two other groups of airlines presented financial results: Japan Airlines and Air France-KLM.
Japan Airlines said it expects a record operating loss of up to 380bn yen (£ 2.81bn) in the year to the end of March, with demand expected to be below 50% by then, due to the pandemic. .
Air France-KLM disclosed a quarterly operating loss of € 1.05 billion (£ 950 million) and a 67% drop in third-quarter revenue to € 2.52 billion (£ 2.3 billion).
IAG shares rose 2.3% in early trading on Friday. In Paris, Air France-KLM fell 2.7% and in Tokyo, Japan Airlines shares fell 3.7%.
