Shares in British Airways’ owner tumble after losses since the start of the pandemic hit £10bn and it warns its recovery has been hit by travel chaos
- IAG posted a loss of £625m for the first three months of the year
- A breakdown of the figures showed British Airways was a significant contributor
- BA loss was £368m over the quarter as it lurches from crisis to crisis
Shares in British Airways’ owner tumbled after losses since the start of the pandemic hit £10billion and it warned its recovery has been hit by travel chaos.
International Consolidated Airlines Group (IAG) – which also owns Aer Lingus, Iberia and Vueling – posted a loss of £625m for the first three months of the year.
A breakdown of the figures showed British Airways was a significant contributor as it posted a loss of £368m over the quarter as it lurches from crisis to crisis.
Under pressure: British Airways boss Sean Doyle has already scrapped flights
It means total losses for IAG since Covid struck in 2020 now stand at a whopping £10billion.
And although chief executive Luis Gallego insisted the company would return to profit in the current second quarter, he conceded the recovery would be slower than previously thought.
Shares were down 8.3 per cent, or 11.88p, at 131.44p.
Danni Hewson, analyst at AJ Bell, said: ‘IAG’s dismal update sent it nosediving to the bottom of the FTSE 100 movers.
‘Summer 2022 should have been one to write home about but with inflation headed up well beyond comfortable cruising altitude there’s a real concern the hoped-for bumper season will be more of a damp squib.’
The results came as the British Airways owner revealed a host of hurdles it is still trying to overcome. One being BA’s recent travel chaos at Heathrow Airport as IAG’s flagship carrier was forced to cancel hundreds of flights due to staff shortages. Last month BA boss Sean Doyle said he was scrapping more flights for the next two months, having already cancelled 1,500 in April. IAG confirmed yesterday it had lowered its full-year group capacity guidance to around 80 per cent of 2019 levels from a forecast of 85 per cent in February.
The hope is that a slimmed-down schedule will help BA manage its operations better, although analysts have suggested that passengers may book elsewhere after the recent disruption. IAG flagged the ‘short-term negative impact’ of the Omicron variant of Covid-19 during the first two months of 2022 but said it has not felt any noticeable impact from the war in Ukraine.
‘Globally, the travel industry is facing challenges as a result of the biggest scaling up in operations in history and British Airways is no exception,’ said Gallego. ‘The welcome removal of the UK’s stringent travel restrictions, combined with strong pent-up demand, have contributed to a steep ramp-up in capacity.’
He added: ‘The airline’s focus at the moment is on improving operations and customer experience and enhancing operational resilience.’
IAG’s passenger capacity was 65 per cent of pre-pandemic levels in quarter one, which was a 7 per cent increase on 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 level since the pandemic started.