Shares of British Airways owner fall after losses since pandemic reach £ 10bn, and he warns its recovery has been hit by tourist chaos
- IAG announced losses of 625 million pounds for the first three months of the year
- A breakdown of the figures showed that British Airways had made a significant contribution
- BA’s loss was £ 368 million for the quarter as it transitions from crisis to crisis
Shares of the British Airways owner fell after losses since the pandemic reached £ 10 billion, and the company warned that its recovery had suffered from travel chaos.
The International Consolidated Airlines Group (IAG) – which also owns Aer Lingus, Iberia and Vueling – reported losses of £ 625 million in the first three months of the year.
A breakdown of the figures showed that British Airways made a significant contribution, as losses for the quarter amounted to 368 million pounds, moving from crisis to crisis.
Under pressure: British Airways chief Sean Doyle has already canceled flights
This means that the total loss of IAG since the emergence of Covid in 2020 now stands at a whopping 10 billion pounds.
And while CEO Luis Gallego insisted the company would return to profits in the current second quarter, he acknowledged that the recovery would be slower than previously thought.
Shares fell 8.3 percent, or 11.88 points, to 131.44 points.
Danny Husson, an analyst at AJ Bell, said: “The grim update of the IAG has brought it to the bottom of the FTSE 100.
“The summer of 2022 should be written home, but due to the fact that inflation has risen well beyond comfortable cruising altitude, there is a real concern that the expected bumper season will be wetter.”
The results came when the British Airways owner discovered many obstacles he was still trying to overcome. One is the recent chaos in BA’s travels at Heathrow Airport as flagship carrier IAG has been forced to cancel hundreds of flights due to staff shortages. Last month, BA chief Sean Doyle said he was canceling more flights for the next two months, having already canceled 1,500 in April. The IAG confirmed yesterday that it has lowered the group’s capacity target for the full year to about 80 percent from 2019 levels from a forecast of 85 percent in February.
Hopefully, the shortened schedule will help BA better manage its operations, although analysts believe that after the recent disruption, passengers can book elsewhere. The IAG noted the “short-term negative impact” of the Omicron Covid-19 variant during the first two months of 2022, but said it had not felt the noticeable impact of the war in Ukraine.
“The world’s tourism industry is facing challenges as a result of the largest expansion of operations in history, and British Airways is no exception,” Gallega said. “The much-coveted lifting of tough travel restrictions in the UK, combined with strong delayed demand, has contributed to a sharp increase in capacity.”
He added: “At the moment, the airline is focused on improving operations and customer experience and improving operational resilience.”
IAG bandwidth was 65 percent from pre-pandemic levels in the first quarter, up 7 percent from last quarter.
Gallega said the IAG sees high customer demand ahead of this summer’s holiday boom, where business travel is at its highest level since the pandemic began.