Shares in British Airways’ parent company tumble
Shares in British Airways’ parent company tumbled yesterday after a catastrophic IT failure stranded thousands of passengers during a long holiday weekend. Shares in the International Airlines Group dropped about 3 percent in the first day of trading after a weekend that saw hundreds of flights cancelled after a power surge led to an IT meltdown. Although the airline was running a full schedule of flights yesterday, it acknowledged passengers were still facing baggage delays.
The company apologized, but shareholders were not forgiving. Kathleen Brooks, the research director at City Index, said investors were concerned the troubles suggested that cost-cutting at IAG had gone too far. “Although cost cutting has been good for the share price in the last year, it will come back to bite IAG if it stops them from doing what they are supposed to do: Fly passengers to their destinations,” Brooks said.
IAG has been battling tough competition in the airline sector, even as it has faced pressure with a weaker pound following Britain’s decision to leave the European Union. The company also issued a profit warning following the Brexit vote nearly a year ago. Rival Ryanair, for example, said it had seen “strong bookings” over the weekend amid BA’s woes. The lowcost carrier posted a 6 percent increase in annual profits Tuesday to 1.3 billion euros ($1.4 billion) despite “difficult trading conditions,” caused by terror attacks in European cities and a sharp decline in the British pound.
Weighing further on the sector is the uncertainty surrounding Britain’s departure from the EU. Kenny Jacobs, Ryanair’s chief marketing officer, told the BBC that airlines need clarity in terms of agreements underpinning international air travel. “I think it’s clear we’re heading to what looks to be a very ugly divorce at the moment,” he said. “Our call on the government here is to please give us and other airlines clari-