MIAMI – Global air carriers continue to report painful financial results due to plummeting demand caused by the COVID-19 pandemic.
International Airlines Group (IAG), the parent company of British Airways (BA), Aer Lingus (EI), Iberia (IB), and other brands, today announced a record €7.4bn (US$9bn) loss for 2020. That compares to a profit of €2.6bn (US$2.15bn) a year earlier.
In the fourth quarter, IAG reported a loss of €1.4bn (US$1.7bn), compared to a profit of €765m (US$924m) in the last quarter of 2019.
The company reported a full-year passenger capacity of 33.5% compared to 2019 loads, stating in its earnings release that IAG “continues to be adversely affected by the COVID-19 pandemic, together with government restrictions and quarantine requirements.”
Cargo is Strong
One bright spot, as with other global carriers, was cargo. IAG airlines flew 4,003 cargo-only flights last year. Cargo revenues totaled €1.3bn (US$1.57bn), up significantly from a year earlier.
“Our results reflect the serious impact that COVID-19 has had on our business. We have taken effective action to preserve cash, boost liquidity, and reduce our cost base. Despite this crisis, our liquidity remains strong,” said CEO Luis Gallego.
“In 2020, our capacity decreased by 66.5 percent while our non-fuel costs went down 37.1 percent thanks to the extraordinary effort across our business. The Group continues to reduce its cost base and increase the proportion of variable costs to better match market demand. We’re transforming our business to ensure we emerge in a stronger competitive position.”
Gallego continued, “The aviation industry stands with governments in putting public health at the top of the agenda. Getting people traveling 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.”
Given the uncertainty on the impact and duration of COVID-19, IAG is not providing profit guidance for 2021.
Light at the End of the Tunnel
According to a report by airlineweekly.com, the Group does expect that its renegotiated agreement to acquire Air Europa (UX) will be signed by the European authorities later this year, as the conglomerate positions the transaction as crucial to establishing a viable alternative to other major European hubs.
As IAG CEO Luis Gallego put it, the combination of UX and IB will transform Madrid into a ‘360-degree hub,’ comparable to what KLM offers in Amsterdam and Lufthansa in Frankfurt (FRA).
After the completion of Brexit, the agreement would give the group a large hub in the European Union, placing the London Heathrow (LHR) base of BA further outside the Schengen area. If all goes well, The IAG Deal is set to create a new European mega-hub.
Featured image: IAG’s British Airways G-XWBC Airbus A350-1041. Photo: Ervin Eslami/Airways
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