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Aer Lingus owner IAG posts €1.14 billion Q1 loss

IAG was flying at just 20% capacity in the three months to the end of March

Aer Lingus and British Airways-owner IAG has forecast only a minimal pick-up in capacity to 25% for the April to June quarter.

The airline group is remaining cautious despite hopes that European travel will start to recover from late May onwards.

The rise to 25% of 2019’s capacity compared to the 19.6% of capacity the airline group flew in the January to March quarter as the pandemic continued to restrict travel.

That resulted in the group posting an operating loss before exceptional items of €1.14 billion for the first quarter to the end of March, slightly better than the €1.17 billion loss forecast by analysts.

IAG said that capacity at Aer Lingus continued to be driven by cargo needs, with flights operating regularly to New York, Chicago and Boston with very low passenger load factors.

It also noted that the route between London Heathrow and Belfast performed well with sustained business traveller demand.

IAG said it continues to take action to preserve cash and boost liquidity and during the first quarter it drew down on debt facilities agreed in 2020.

This includes £2 billion for British Airways from UK Export Finance and €75m for Aer Lingus from the Ireland Strategic Investment Fund.

IAG, which also owns Iberia and Vueling in Spain, said it reduced weekly cash burn to €175m, a better performance than the €185m a week it had previously guided for the period.

The group also said it had strong liquidity of €10.5 billion at the end of the first quarter.

Given the uncertainty over the timing of the lifting of government travel restrictions and the continued impact and duration of Covid-19, IAG said it would not provide profit guidance for 2021.

IAG chief executive Luis Gallego said in a statement the airline was “ready to fly but government action is needed”.

IAG CEO Luis Gallego

He called for travel corridors to open between countries with high vaccination rates, such as the UK and US.

IAG’s capacity plans put it behind Air France-KLM, which said yesterday that it expects to operate 50% of its pre-pandemic flight capacity in the second quarter.

Lufthansa last week cut its capacity to forecast to about 40% of its pre-pandemic capacity for 2021.

European airlines hope that by July, much of the continent will be open for travel, meaning bookings will rise and they can ramp up capacity to start repairing their Covid-19 battered finances.

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