British Airways owner cautious on vaccines boost as losses hit £6.5bn

BRITISH Airways owner IAG slumped to the biggest loss in its history as the pandemic grounded travel and ripped apart its business model.

Passenger numbers in 2020 were down by more than 75% contributing to a record full-year operating loss of €7.4billion (£6.5 billion), the worst in the group’s 10-year history.

That is one of the heaviest on the FTSE 100 so far this year, with only Shell and BP having lost more money.

IAG is burning through cash at a rate of £70 million a week and passenger numbers are expected to be even worse this quarter, down to 20% of 2019.

Faced with the eye-watering figures Luis Gallego, who took over as IAG’s chief executive in October, today called for the introduction of globally-recognised testing standards and health passes to “reopen our skies safely”.

Although holiday bookings have spiked since Boris Johnson unveiled his roadmap out of lockdown on Monday, the firm said there are “many twists and turns” to come.

Gallego told investors: “Getting people travelling again will require a clear roadmap for unwinding current restrictions when the time is right.

“We know there is pent-up demand for travel and people want to fly. Vaccinations are progressing well and global infections are going in the right direction. We’re calling for international common testing standards and the introduction of digital health passes to reopen our skies safely.”

Last year’s overall loss compares with a profit of £2.3 billion in 2019. It includes £2.6 billion hedging losses on fuel bought but not used, writedowns on the value of its fleet and restructuring costs. BA has cut some 13,000 staff and retired all of its Boeing 747-400 Jumbos.

The company shored up its finances with £2.45 billion from a UK government-backed loan and the deferral of pension contributions and said it is in a strong financial position to rebound when travel recovers.

One bright spot was cargo revenue, up 18.5% on 2019 to £1.2 billion, with some flights operatedfor freight rather than passengers. But while the entire aviation sector has suffered, analysts said IAG may be slower to bounce back than budget competitors with corporate and long-haul travel expected to recover more slowly than the leisure sector. CMC Markets’ Michael Hewson said: “The ‘World’s Favourite Airline’ is likely to be a much slimmed down version when we come out the other side.”

Shares rose 8.75p, or 4.3%, to 195.00p.