British Airways parent International Airlines Group’s first-quarter 2022 loss of €754 million ($795 million) was due to normal seasonality, the effect of the Covid-19 omicron variant in January and February—which in particular reduced business demand—and the cost of ramping the business back up, IAG CFO Nicholas Cadbury said Friday during a first-quarter earnings call.
The loss, however, was partially offset by the end of the quarter by the continuing strong performance of premium leisure and “the solid return of business traffic,” Cadbury added, with the continued easing of government travel restrictions, “particularly in the U.K.,” resulting in a significant improvement in travel demand, with a “good steady recovery in business travel.”
British Airways’ premium-class business revenue recovered from 20 percent of 2019 levels in January to 45 percent in March. For Iberia, premium business was about 40 percent recovered in January and 60 percent in March. “The partial recovery in business travel is consistent with the return of many companies to the office, particularly in London, Madrid and the U.S.,” Cadbury said.
The total business segment is “around 67 percent” recovered from 2019 levels, IAG CEO Luis Gallego said. “Business traffic is coming back.”
Broken down by vertical, banking and finance have recovered to around 65 percent from 2019, according to Gallego, while some investment banks are back to almost 100 percent levels on North Atlantic routes, Cadbury added. In April, BA’s business-channel bookings of North Atlantic routes recovered to 90 percent of 2019 levels. The technology and pharmaceutical sectors have recovered “the least,” Gallego said, while small and midsize businesses have recovered the most.
IAG reported first-quarter revenue of €3.4 billion ($3.6 billion) with passenger revenue of nearly €2.7 billion ($2.8 billion). Both were significantly up from Q1 2021 figures of €963 million ($1 billion) and €454 million ($479 million), respectively. Available seat kilometers were just over 49,000 compared with nearly 15,000 one year prior.
First-quarter 2022 capacity was at about 65 percent of 2019 levels, Gallego said. The company plans to operate capacity at 80 percent of 2019 levels for the second quarter and 85 percent for the third quarter. IAG also expects to restore a full network on North Atlantic routes by the third quarter, but with a slightly lower capacity of 95 percent compared to three years ago. The company anticipates full-year 2022 capacity to be around 80 percent recovered.
IAG also expects to be profitable “at the operating level” from the second quarter and for full-year 2022, Gallego said, despite a significant increase in the price of jet fuel. To date, the company has not seen a noticeable effect on demand from the conflict in Ukraine, but many long-haul markets remain shut in most of Asia, he said.
BA’s performance also was negatively affected by “well-publicized” disruptions at Heathrow, “with a total impact of around €50 million ($53 million) in the quarter, impacting both revenues and costs,” Cadbury added.
LONDON (Reuters) – British Airways-owner IAG said on Friday it had seen a strong recovery in business travel in the first quarter and it expected to be profitable from the second quarter onwards and for the full year.
The company, which also owns Iberia and Aer Lingus, said the continued easing of government-imposed travel restrictions, particularly in Britain, resulted in improved travel demand, with no noticeable impact from the war in Ukraine.
“Demand is recovering strongly in line with our previous expectations,” Chief Executive Luis Gallego said, adding that the company was currently focused on improving operations, customer experience and its operational resilience.
British Airways was hit by separate technical issues in February and March and also had to cancel a small number of flights in April due to staff sickness and delays in ramping up crew levels.
IAG said it would ramp up capacity from 65% of 2019 levels in the first quarter to around 80% in the second, 85% in the third and 90% in the fourth, with North Atlantic routes close to full capacity by quarter three.
The company reported a first-quarter operating loss of 731 million euros, compared with a restated 1.07 billion euros for the same period a year ago.
(Reporting by Paul Sandle; editing by James Davey)
Copyright 2022 Thomson Reuters.
International Consolidated Airlines Group, the parent
company of British Airways, Iberia, Aer Lingus, Level and Vueling, forecasts
that it will return to profitability from the second quarter on for this year,
despite the Covid-19 omicron variant having a negative short-term effect on the
second half of the fourth quarter of 2021 and on the first quarter of 2022, according
to the company’s earnings results released Friday.
IAG reported a fourth-quarter loss of €278 million, and a
full-year 2021 loss of €2.8 billion, versus a €7.5 billion loss in 2020. Quarterly
passenger revenue was €2.7 billion. Full-year passenger revenue was €5.8
billion, up 5.9 percent from 2020.
“Business travel has started to recover, especially on
the transatlantic routes,” IAG CEO Luis Gallego said in a statement.
“Prior to omicron, long-haul traffic had seen the highest booking activity
in October and November at over 80 percent of 2019 levels.”
IAG passenger capacity for the quarter was 58 percent of
2019 capacity, up from 43 percent in the third quarter. Full-year 2021 capacity
was 36 percent of 2019 levels. Current passenger capacity plans for 2022 are 65
percent for the first quarter and 85 percent by year-end compared with 2019
levels. The company anticipates delivery of 25 new aircraft in 2022.
Looked at by carrier, Vueling led capacity for the fourth
quarter at 79 percent of Q4 2019 levels, followed by Iberia at 75 percent.
British Airways ended the fourth quarter at 53 percent of 2019 capacity, while
Aer Lingus was at 44 percent and Level was at 11 percent.
The company’s North American capacity was “severely
limited” by the U.S. government’s Covid-19 travel restrictions, which were
lifted for European Union and United Kingdom citizens on Nov. 8, 2021. Prior to
that easing, flights operated mostly for cargo purposes. Passenger load factor
for the region was down 34.7 points versus 2019 to 49.4 percent, reflecting the
U.S. government restrictions for most of the year.
Q3 2021 earnings
International Airlines Group has reported an operating loss of €452 million for the third quarter of financial 2021.
The figure compares to a loss of €1,923 million seen during the same period last year.
The group – which controls British Airways, Iberia and Aer Lingus – reported operating losses of €2,487 million for the first nine months of the year, down from €5,975 million for the same period last year.
Luis Gallego, IAG chief executive, said: “There’s a significant recovery underway and our teams across the group are working hard to capture every opportunity.
“We continue to capitalise on surges in bookings when travel restrictions are lifted.”
He added: “All our airlines have shown improvements with the group’s operating loss more than halved compared to previous quarters.
“In quarter three, our operating cash flow was positive for the first time since the start of the pandemic and our liquidity is higher than ever, reaching €12.1 billion on a pro forma basis at the end of October.
“The full reopening of the transatlantic travel corridor from Monday is a pivotal moment for our industry.
“British Airways is serving more US destinations than any transatlantic carrier and we’re delighted that we can get our customers flying again.”
In the short term, IAG said it was focused on getting ready to operate as much capacity as it could, setting the company up to return to profitability in 2022.
However, losses are expected to total €3 billion this year.
“Our teams are creating opportunities,” said Gallego, “and implementing initiatives to transform our business and preparing it for the future so that we emerge more competitive.
“This includes initiatives such as our new short-haul operation at Gatwick, Vueling’s expansion at Paris-Orly, Aer Lingus’ services from Manchester to the US and the Caribbean and our new maintenance model in Barcelona.”
International Airlines Group (IAG) has become the first European airline group to commit to powering ten per cent of its flights with sustainable aviation fuel by 2030.
The group will purchase one million tonnes of sustainable jet fuel per year enabling it to cut its annual emissions by two million tonnes by 2030.
In addition, IAG will become the first airline group worldwide to extend its net zero commitment to its supply chain.
The group will be working with its suppliers to enable them to commit to achieving net zero emissions by 2050 for the products and services they provide to IAG.
Luis Gallego, IAG chief executive, said: “For more than a decade, IAG has led the airline industry’s actions to reduce its carbon footprint.
“It’s clearly challenging to transition to a low carbon business model but, despite the current pandemic, we remain resolute in our climate commitments.
“Government support is critical to meet this target by attracting investment to construct sustainable aviation fuel plants that will deliver enough supply for the airline industry, creating highly valued green jobs and economic growth at global scale.”
With the right policy in place in the next ten years up to 14 plants could be built across the UK, creating 6,500 jobs and saving 3.6 million tonnes of CO2 per annum.
Sustainable jet fuel produces at least 70 per cent less carbon emissions than fossil fuel.
Grant Shapps, transport secretary, said: “Just this week we’ve set the world’s most ambitious climate change target, and IAG’s agenda-setting commitment is clear evidence of the progress we are making.
“These kinds of initiatives, along with our work through the Jet Zero Council, will help us rapidly accelerate towards our net zero targets as we build back better out of the pandemic.”
British Airways parent International Airlines Group is seeing some long-haul booking spikes concurrent with announcements of potential easing of the U.K. federal lockdown, according to the carrier group, offering a silver lining of potential pent-up business travel demand after a difficult fourth quarter of 2020.
IAG, also parent of Iberia, Aer Lingus and Vueling, on Friday reported fourth-quarter passenger revenue declined more than 87 percent year over year to €684 million, and the company lost more than €1.6 billion during the quarter before taxes. Still, IAG CEO Luis Gallego pointed to recent booking trends as a sign that pent-up demand exists particularly for leisure travel but also some business travel, including long-haul.
Gallego cited increased booking activity after U.K. prime minister Boris Johnson on Feb. 22 announced a government review of procedures to restart international travel.
“Bookings at BA have surged since prime minister made known the U.K. government lockdown exit plans on Feb. 22,” Gallego said Friday during the carrier’s quarterly earnings call. “On the day itself, flight-only bookings increased by over 60 percent and BA Holidays by 200 percent compared to the same time period a week ago. There was an even stronger rate of bookings on Feb. 23. For example, BA Holidays was up 560 percent compared to the previous week. Booking activity has also been strong during the rest of the week.”
While business travel pent-up demand might not be quite as dramatic, Gallego said he nevertheless expects a spike as lockdowns ease and vaccines proliferate, but reaching pre-pandemic levels of demand remains a multi-year process.
“In the case of traveling for work, I think, first of all, different companies and the individual both need to be accepting the risk of traveling during the pandemic period,” he said. “But we think that after these quarantines are removed, there are a lot of customers that are willing to travel—and we know that it’s not the same, and we have learned during this year to do business with Teams or Zooms—[but] there are a lot of activities that require face-to-face meetings.”
Still, Gallego said of business travel volume, “As we have always said, we consider that in 2023, 2024, we can come back to the levels that we have in 2019.”
IAG’s fourth-quarter passenger capacity was 26.6 percent, down 73.4 percent year over year. For full-year 2020, passenger capacity was 33.5 percent, down 66.5 percent from 2019. IAG’s full-year passenger revenue was €5.51 billion, down 75.5 percent year over year, and the carrier’s annual operating loss in 2020 was nearly €7.43 billion, compared with a €2.61 billion profit in 2019.
Embleton Named Aer Lingus CEO
IAG also named IAG Cargo chairman and chief executive Lynne Embleton as CEO of Aer Lingus. Embleton, who also has held roles at British Airways, replaces Donal Moriarty, who has served as interim CEO since former CEO Sean Doyle was named BA CEO in October. Moriarty will return to his former position of Aer Lingus chief corporate affairs officer, according to IAG.