MIAMI – International Airlines Group (IAG) CEO Willie Walsh admitted to the UK Transport Committee that he doesn’t expect operations to return to pre-COVID-19 levels until 2024 at the latest.
This news comes following a session held this morning with the committee to discuss the group’s actions and those of British Airways (BA) during this pandemic.
Disruption Expected Until 2024 at The Earliest
Walsh said that the situation was constantly being assessed, and added a caveat that other airlines he has spoken to have said that the disruption could last until 2026 at the latest, but did not disclose which other airlines said that.
He also mentioned that 2023 would be the “most optimistic” scenario for a post-COVID-19 recovery and that during this period of uncertainty, IAG would “gradually build up” operations.
It is understood that IAG is burning around €200m in cash every week because of the pandemic, and has been making job cuts across the airlines in the group.
Initially, Willie Walsh was hoping for a restart in operations for BA from July this year.
However, due to Prime Minister Boris Johnson’s announcement on now quarantining travelers who enter the country for up to 14 days, the restart is now to be reviewed again.
And because of this, he said the “likelihood of improvement in the short-term is zero.”
British Airways has been operating primarily cargo-based services, recording around 422 flights operated in the month of April, with numbers in May and June of this year expected to rise.
Around 2,000 tons of Personal Protective Equipment and other cargo have been carried across those flights in April, highlighting significant demand in the cargo sector of the industry.
British Airways as The King of IAG?
British Members of Parliament continued to press Walsh on the structure of BA itself, offering questions about commitments to the nation’s flag carrier.
He said that BA would continue to be the “king of the IAG Group,” but had to restructure it with job cuts and other elements due to its high fixed-cost base.
The airline itself is currently in a consultation process following the decision to cut 12,000 jobs.
The Big Bailout Question
On the subject of bailouts, Walsh said that IAG itself is not in the position to opt for a state bailout from the Spanish Government.
For British Airways, his answer delegated the decision making to those at the top of BA, such as its CEO Alex Cruz.
“Any funds raised is done at the operating company level supported by the balance sheet,” he said to the committee.
There were also accusations from MPs that Walsh had been giving preferential treatment to the other airlines in the business. One MP who misinformed mentioned that there were no job cuts for its assets in Europe.
Walsh was keen to correct the MP on that matter, saying that those at Aer Lingus (EI) will cut around 900 jobs with more cuts to be expected across Iberia (IB) and Vueling (VY), among others.
He was also insistent that IAG was “not picking on British Airways” because of the intense number of job cuts there would be. He said it was about the “survival” of the business.
Deferral on Deliveries
Further cost-cutting has seen the group defer aircraft deliveries. Between now and 2022, the Group was due to receive around 142 aircraft.
This has now been reduced to 68 as it aims to deal with the lack of demand from the outbreak.
The Group still has a Letter of Intent (LoI) signed with Boeing for 200 737MAX aircraft from the Paris Air Show last year, an item which came into question at the session with the committee.
Walsh was keen to mention that the order was a LoI as opposed to a firm order, meaning that IAG can back out of the deal if its financials do begin to deteriorate.
IAG’s High Level of Refunds
On the topic of refunds, Walsh did disclose to the committee that IAG has made around €1.1b worth of refunds back to customers, remaining committed to carrying on with the same.
That question was likely to come up given the words from the Civil Aviation Authority stating that UK carriers have to process refunds; otherwise, action would be taken to ensure such money is handed back to consumers.
Willie Walsh will be stepping down from the helm of one of the largest and most successful airline conglomerates in the world.
Founded in January 2011, Walsh took the CEO position from the offset at IAG, rapidly transforming it into an airline group formed by British Airways (BA), Iberia (IB), Vueling (VY), Aer Lingus (EI), and Level (LV).
Walsh’s stepping down will take place in two stages—on March 26, he was set to stand down from his role as CEO and from the Board of IAG. On June 30, he will retire completely. It seems now that his exit from the company is set to be a tumultuous one in light of the current crisis.
Overall, while Walsh was keen to avoid some questions regarding job cuts, he did produce some insightful information about the Group’s efforts to tackle the virus.
All eyes will now be on BA to see how the consultation stage will go for the job cuts and also to see what other restructuring plans the carrier may have going forward; especially, if we do not return to 2019 levels for another three to five years.