International Airlines Group (IAG) – parent company of British
Airways, Iberia, Aer Lingus and Vueling – will cut winter capacity to no more than 30
per cent of what it was in 2019 in a bid to stem losses.
Announcing a preliminary loss of €1.3 billion for the third
quarter of 2020, down from a profit of €1.4 billion in the same period last
year, the group’s chief financial officer Stephen Gunning said it no longer
expects to reach breakeven in terms of net cash flows from operating activities
during Q4.
The company
said that passenger capacity in the third quarter declined by 78.6 per cent and
passenger traffic declined by 88.0 per cent. Seat load factor in the quarter was
just 48.9 per cent.
Gunning said: “Recent overall bookings have not developed as previously
expected due to additional measures implemented by many European governments in
response to a second wave of Covid-19 infections, including an increase in
local lockdowns and extension of quarantine requirements to travellers from an
increasing number of countries.
“At the same time, initiatives designed to
replace quarantine periods and increase customer confidence to book and travel,
such as pre-departure testing and air corridor arrangements, have not been
adopted by governments as quickly as anticipated."
Despite this,
the airline group said that its liquidity remained strong.
He added: “As at 30 September 2020, the group had total
liquidity of €6.6 billion, comprising €5.0 billion of cash, cash equivalents
and interest-bearing deposits, and €1.6 billion of undrawn and committed general
and aircraft facilities. In addition, €2.74 billion of gross proceeds from the capital
increase were received in early October for a total pro-forma liquidity of €9.3
billion.”
The group recently announced that BA boss Alex Cruz was stepping down with immediate effect. His replacement, Sean Doyle, has since criticised government inaction on opening up routes to the US.