British Airways owner IAG reports record losses of £6.5bn due to pandemic
British Airways owner IAG has today reported record losses of more than £6.5bn and has called on the government to introduce digital health passes to safely reopen travel.
The impact of the COVID-19 pandemic has devastated the industry, and IAG are just the latest firm to report mass losses.
IAG blamed the losses on the fact that the large percentage of all flights have been grounded since the pandemic struck last year.
IAG reported revenue was a 69.4% drop in comparison to the previous year.
As a result, no 2020 dividend will be paid to investors – and no guidance has been set for the rest of 2021.
The shares rose 2.3% following the announcement.
However, UK airlines received some positive news earlier this week following the government’s roadmap announcement, which revealed that travel could possibly reopen from mid-May. However, nothing is confirmed on what that might look like – with a further announcement expected after March 29.
IAG – which also owns other airlines, including Iberia, Aer Lingus and Vueling – publicly stated that the industry needs more guidance.
CEO of IAG, Luis Gallego, said: “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.
“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.”
Laura Hoy, Equity Analyst at Hargreaves Lansdown said: “There’s no getting around just how ugly IAG’s final results are. With the coronavirus crisis clearing the skies for over a year, it’s not unexpected to see IAG operating as just a shell of its former self. Management has responded in the only possible way—by securing new funding and slashing costs—but ultimately the group is at the mercy of the government’s travel restrictions.
“IAG did what it could to make up for lost passenger flights by upping its cargo-only voyages, but it did very little to dull the pain of a 75% decline in passenger revenues.
“Moving forward, IAG is sticking to the same playbook—hoard cash and hope the pandemic will subside. With vaccine rollouts ramping up around the world, the wait could soon be over. Whether it will be in time for the summer travel season, which IAG desperately needs, is another question.
“By that point, though, we’re concerned about how much the group will have sacrificed. A huge debt pile and the regulatory red-tape that comes with taking on government loans were a necessary evil for IAG, but they could also hinder performance well into the future.”