British airline giant IAG nosedives to 6.9-bn-euro annual loss

British Airways owner IAG said Friday it suffered a 2020 net loss of 6.9 billion euros ($8.4 billion) as the coronavirus pandemic paralyzed air travel.

The huge loss after tax compared with a net profit of 1.7 billion euros in 2019, IAG said in a results statement.

Revenues slumped almost 70 percent to 7.8 billion euros from 25.5 billion euros as passenger capacity was slashed, hit by evaporating demand and changing national travel restrictions throughout the year.

The number of passengers remains significantly down on pre-pandemic levels, while capacity was just 33.5 percent of 2019 and continues to be adversely affected.

'Serious' Covid impact

"Our results reflect the serious impact that Covid-19 has had on our business," said chief executive Luis Gallego.

IAG, whose portfolio also includes Ireland's Aer Lingus and Spain's Iberia, is undertaking a painful cost-cutting drive and has axed thousands of jobs as it navigates the dizzying downturn in international aviation.

The company said it has already axed the "substantial majority" of 10,000 jobs at British Airways -- or one quarter of the carrier's workforce -- as well as 500 positions at Aer Lingus.

It had previously flagged around 13,000 job cuts at BA.

"We have taken effective action to preserve cash, boost liquidity and reduce our cost base. Despite this crisis, our liquidity remains strong," Gallego said.

The group's bottom line was also impacted heavily by restructuring costs and the impairment of aircraft and other assets as a result of the pandemic.

Additionally, there were exceptional charges for jet fuel and foreign currency hedging contracts which turned sour.

Airlines seek to bet against volatile oil and forex market swings by taking defensive positions on futures markets. If they get the market direction wrong, it can turn out costly.

'Pent-up demand'

Gallego meanwhile revealed that IAG had experienced a "big increase" in demand after the government announced plans last week to ease England's current coronavirus lockdown largely due to the success of its rapid vaccination drive.

Prime Minister Boris Johnson's four-month road map to ease Covid-19 lockdown curbs by the northern hemisphere summer has also sparked hopes of easing restrictions elsewhere.

Johnson's announcement also prompted a surge in flight bookings for IAG's no-frills rival EasyJet.
"We know there is pent-up demand for travel and people want to fly," Gallego said.

"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 International Air Transport Association however predicts global air passenger traffic will recover more slowly than expected this year as coronavirus variants spark infection flare-ups, forcing governments to take fresh action to curb their spread.

(Source: AFP)

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