An Iberia Airbus A319 touching down in Brussels. (Photo: AirlineGeeks | Fabian Behr)
International Airlines Group (IAG) announced its Q2 results on Friday that indicated progress in the consortium’s recovery from the pandemic. The parent company of the U.K. and European airlines including British Airways, Iberia, Vueling, Aer Lingus and LEVEL revealed an operating loss of €967 million ($1,148 million) that compares to a restated loss of €2,182 million ($2,592 million) for the same period in 2020.
Luis Gallego IAG chief executive said: “All our airlines continue to take significant actions to preserve their strength through the current pandemic and to position them for recovery. We continue to build resilience by preserving cash, boosting liquidity and reducing our cost base. On June 30, the Group’s liquidity was €10.2 billion ($12.11 billion) with a significant improvement in operating cash flow compared to previous quarters.
“Longer term we’re preparing our business so that we can emerge stronger and more competitive in a structurally changing industry. For example, we’re accelerating the digitalization of our business and our agreements with unions are enabling us to improve productivity and reduce our cost base while increasing the proportion of variable costs.”
Mr. Gallego identified Spanish-based carriers Iberia and Vueling as the best performers for the quarter citing “stronger Latin American and Spanish domestic markets are driven by fewer travel restrictions.”
On the contrary, both the UK and Ireland have had some of the strictest restrictions in the region related to passenger arrivals from international travel. This has impeded British Airways and Aer Lingus in stimulating demand and rebuilding passenger confidence in air travel resulting in IAG drawing down £2.0 billion ($2.79 billion) for British Airways from UK Export Finance and €75 million ($89 million) for Aer Lingus from the Ireland Strategic Investment Fund in the first six months of 2021, from debt facilities agreed upon in 2020.
Capacity for the quarter across the group was at 22 percent of pre-pandemic levels though this is forecast to rise to 45 percent for Q3 which encompasses the summer period. Mr. Gallego advised that the group would plan for 75 percent of 2019 levels for the final three months of 2021 though actually achieving this will be dependent on a number of factors outside of IAG’s control. Foremost amongst these is the full reopening of the trans-Atlantic travel corridor that constitutes a significant amount of British Airways network. According to the Guardian, Mr. Gallego acknowledged this by advising reporters at the announcement that “the weight of our network is balanced to the Atlantic.”
IAG’s fortunes will therefore be buoyed by the news this week that the UK will remove quarantine and self-isolation requirements for travelers arriving from the U.S. and E.U. from Monday, Aug. 2, as long as the countries remain off the ‘Red List’. However President Joe Biden this week ruled out any kind of reciprocal arrangement for the U.K. and European travelers entering the US in the foreseeable future.
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