Shares in the British Airways owner have tumbled after losses hit £10billion since the pandemic began, and it warns its recovery has been hit by the travel chaos
- IAG posted a loss of £625m for the first three months of the year
- The breakdown of the figures showed that British Airways made a significant contribution
- BA’s loss hit £368m in the quarter as it tumbles from crisis to crisis
Shares in the British Airways owner tumbled after losses hit £10billion since the start of the pandemic and it has been warned its recovery has been hit by the travel chaos.
International Consolidated Airlines Group (IAG), which also owns Aer Lingus, Iberia and Vueling, reported a loss of £625m for the first three months of the year.
A breakdown of the figures showed that British Airways was a key contributor as the company posted a loss of £368m over the quarter as it tumbled from crisis to crisis.
Under pressure: British Airways boss Sean Doyle has already canceled flights
This means the total losses for IAG since the outbreak of Covid in 2020 are now a whopping £10billion.
And while CEO Luis Gallego insisted the company would return to profitability in the current second quarter, he acknowledged the recovery would be slower than previously thought.
Shares fell 8.3 percent, or 11.88 pence, to 131.44 pence.
Danni Hewson, analyst at AJ Bell said: “IAG’s dismal update sent it to the bottom of the FTSE 100 movers.
“The summer of 2022 should have been food for thought, but with inflation well above comfortable cruising levels, there are real concerns that the hoped-for record-breaking season will be more of a wet squip.”
The results came as the British Airways owner revealed a number of hurdles he is still trying to overcome. One of these is BA’s recent travel chaos at Heathrow Airport, as staff shortages have forced IAG’s flagship airline to cancel hundreds of flights. Last month BA chief Sean Doyle said he would cancel more flights for the next two months after already canceling 1,500 in April. IAG confirmed yesterday that it had lowered its full-year group capacity forecast to around 80 percent of 2019 levels from a forecast of 85 percent in February.
The hope is a trimmed schedule will help BA better manage its operations, although analysts have suggested passengers could book elsewhere following the recent disruption. The IAG pointed to the “short-term adverse effects” of the Omicron variant of Covid-19 in the first two months of 2022, but said it felt no noticeable impact from the war in Ukraine.
“Globally, the travel industry is facing challenges due to the largest expansion of operations in history and British Airways is no exception,” Gallego said. “The welcome lifting of the UK’s severe travel restrictions, coupled with strong pent-up demand, has contributed to a steep capacity build.”
He added: “The airline’s current focus is on improving operations and customer experience, as well as improving operational resilience.”
IAG’s passenger capacity in the first quarter was 65 percent of pre-pandemic levels, up 7 percent from the final quarter of last year.
Gallego said IAG is seeing strong customer demand ahead of this summer’s holiday boom, with business travel at its highest since the pandemic began.
As BA warns of more travel chaos to come, IAG shares suffered a £10bn loss
Source link As BA warns of more travel chaos to come, IAG shares suffered a £10bn loss