Walsh warns IAG is burning cash as UK quarantine looms

AER Lingus owner IAG has exhausted every avenue to shore up its finances and is burning through cash, its CEO said yesterday, as the aviation industry warned of the fresh damage it would suffer if Britain quarantines international arrivals.

Willie Walsh told the UK parliament’s transport committee IAG would have to review plans to resume flying in July if the government pressed ahead with plans to introduce a quarantine on most people coming into the country by air as part of measures to prevent a second peak of the coronavirus pandemic.

While Mr Walsh said IAG was not in a position where it had to ask for a specific bailout from the UK government, he added the quarantine plan would add to the pressure on the group.

“We’ve probably exhausted every avenue that I can think of at this stage to shore up our liquidity. The cash has been reducing significantly and that will be the case as we go through May, June and July.

“The announcements yesterday of a 14-day period (of quarantine) for coming into the UK, it’s definitely going to make it worse,” he said, forecasting demand for “minimal” capacity under such rules.

Questioned by UK lawmakers over a British Airways plan to lay off up to 12,000 people, or 30pc of its workforce, Mr Walsh told lawmakers that aviation was facing the deepest crisis in its history.

“The industry has changed and anybody who believes that we’re going back to the way things were in 2019 misunderstands the scale of the challenge that is being faced,” he said.

He suggested job losses could follow at IAG’s other airlines, Iberia and Vueling in Spain and Ireland’s Aer Lingus, saying that Iberia management would be doing “everything they possibly can to right-size Iberia”.

Global aviation is facing a battle to survive, with most flights grounded since March due to travel restrictions to contain the pandemic.

Britain’s new quarantine rules risk derailing any recovery for UK-based airlines, and the industry urged the government to come up with an alternative plan.

Heathrow Airport, which during normal times is

Europe’s busiest airport but saw passenger numbers plunge 97pc in April, called for common international standards to enable passengers to travel freely between low-risk counties once the virus is under control.

That would allow borders to be reopened, it said.

Meanwhile, budget airline easyJet said any quarantine requirements must be short-lived and replaced by a targeted regime allowing lowrisk passengers to travel easily.

Mr Walsh said IAG was working with regulators to implement a common system across Europe of measures to be taken at airports and on board aircraft to stop the disease spreading. He said he believed the European Union Aviation Safety Agency (EASA) would publish a draft document on safety measures later this week.

Airlines UK, which represents British Airways, easyJet and other UK carriers, said quarantine measures would lead to the industry requiring additional government support. The industry body has already asked for Britain’s job retention scheme to be extended beyond June, and requested a temporary suspension of some taxes airlines pay, such as air passenger duty.

Aviation is facing the deepest crisis in its history