International Consolidated Airlines Group (IAG) has reported a first quarter operating loss of €1,068 million, an improvement on the 2020 first quarter operating loss of €1,860 million). Before exceptional items, IAG’s operating loss was €1,135 million.
IAG passenger revenue for the first quarter was €459 million – some 88% lower than in 2020 – with total revenue down by 78.9% to €968 million.
Passenger capacity was 19.6% of 2019 and continues to be adversely affected by the COVID-19 pandemic, together with government restrictions and quarantine requirements. IAG’s current passenger capacity plans for quarter two are for around 25% of 2019 capacity, but the airline states they “remain uncertain and subject to review”.
IAG operated 1,306 cargo-only flights operated in the first quarter, up from 969 in the fourth quarter of 2020.
IAG’s liquidity remains strong and increased to €10.5 billion at the end of the quarter (from total pro-forma liquidity of €10.3 billion at December 31, 2020), driven by successful conclusion of financing initiatives in the quarter. These include: the drawdown of previously committed borrowing for British Airways (£2.0 billion UK Export Finance) and Aer Lingus (€75 million drawn against Ireland Strategic Investment Fund facility); and additional €1.2 billion of IAG senior unsecured bonds issued, with “issue heavily oversubscribed”; new three-year $1.755 billion committed, secured revolving credit facility concluded for Aer Lingus, British Airways and Iberia and which remains undrawn; cancellation of British Airways’ previous revolving credit facility scheduled to mature in June 2021 (value at December 31, 2020: $0.8 billion). These figures also include the agreement for British Airways to defer monthly pension deficit contributions totalling £450 million between October 2020 and September 2021 and the reduction in cash operating costs for the quarter reduced to €175 million per week.
Luis Gallego, IAG Chief Executive Officer, said: “We’ve acted decisively to build resilience by boosting liquidity and reducing our cost base. At March 31, the Group’s liquidity increased to €10.5 billion which demonstrates IAG’s good access to capital markets.
“Cargo has enabled us to operate a more extensive passenger longhaul network. In addition, we operated 1,306 cargo-only flights and generated €350 million in revenue, a record for quarter 1.
“We’re taking all necessary actions to ensure the financial health of our business for the long-term, including last year’s successful €2.7 billion capital increase, and remain focused on reducing our cost base and increasing efficiencies.
“Despite the challenges posed by the current pandemic, our focus on the safety of our people and customers remains paramount alongside our climate commitments. Our pledge to powering 10 per cent of our flights with sustainable aviation fuel by 2030 shows that we will not back down from our ambition to lead aviation’s efforts to reduce its carbon footprint.”
Gallego adds that the airline group is “doing everything in our power to emerge in a stronger competitive position” and that it is “confident that a safe re-start to travel can happen as shown by the scientific data”. He adds however that government action is needed through four key measures: establishing travel corridors without restrictions between countries with successful vaccination rollouts and effective testing such us the UK and the US; implementing affordable, simple and proportionate testing to replace quarantine and costly, multi-layered testing; better staffing of borders using contactless technology including e-gates to ensure a safe, smooth flow of people and frictionless travel; and creating digital passes for testing and vaccination documentation to facilitate international travel.
“These measures will enable a safe re-opening of our skies. Travel underpins a global industry that supports 13 million jobs in Europe alone. There’s a high level of pent-up demand and aviation will play a critical role in reconnecting people and getting economies back up and running again.”
Given the uncertainty over the timing of the lifting of government travel restrictions and the continued impact and duration of COVID-19, IAG is not providing profit guidance for 2021.