International Airlines Group (IAG), owner of British
Airways, Iberia and Aer Lingus, among other carriers, is planning to cut
capacity by 60 per cent compared to 2019 levels for the fourth quarter of 2020 thanks to
ongoing travel restrictions – particularly in the long-haul market.
The group said that while it was encouraged by an increase in bookings in June to 30 per cent of last year's levels following an “almost
complete cessation” in April and May, the re-implementation of quarantine requirements
by the UK and other European governments returning from specific countries has “levelled
off” forward bookings across its airlines.
IAG added that it had been prepared for a delayed recovery
in long-haul booking activity, impacted by ongoing restrictions for
transatlantic flights to North and South America, but that it had seen a “modest
increase” in long-haul bookings since mid-August.
As a result, capacity for Q3 is expected to be down 78 per
cent compared to last year, while Q4 will decline by 60 per cent – much lower
than IAG’s original estimate of 46 per cent – and overall capacity for 2021 could
decline by 27 per cent. The group continues to predict that passenger demand
will not return to 2019 levels until at least 2023.
The group made its predictions as it released details of a
previously announced fully underwritten capital increase aimed at raising more
than €2.7 billion from shareholders through the sale of new shares at a
discounted price. Largest shareholder Qatar Airways has already agreed to buy
its pro-rata entitlement of new shares. IAG said it would use the extra cash to
reduce debt and help it survive a long-term downturn in travel.
BA is still in the process of reducing its headcount by up
to 13,000. By the end of August, it had cut staffing levels by 8,236 employees, mostly
through voluntary redundancy, according to IAG. The carrier has reached labour
agreements with pilots, engineers and customer service staff at Heathrow
airport, while the Unite union will soon be balloting cabin crew on a deal.
Other consultations with Heathrow ground handling services and cargo operations
staff, UK call centre employees and Gatwick-based cabin crew are ongoing.
Meanwhile, IAG said Iberia and Vueling will continue to
benefit from the Spanish government’s furlough scheme, which is expected to be
extended into 2021. Aer Lingus has implemented salary and working hours
reductions across the airline and expects 250 voluntary redundancies by the end
of the year.