British Airways owner hit by £2.6bn loss

BRITISH Airways-owner IAG warned it will post a whopping £2.6bn loss this year as it hopes the imminent restart of transatlantic travel will revive its fortunes.

The FTSE 100 group, which also owns Aer Lingus, reported a loss of £2.1bn in the nine months to the end of September, although this was less than half of the £5.1bn in losses it racked up in the same period last year as the pandemic shut down global air travel.

Passenger revenues were less encouraging, having plunged 35pc to £2.7bn compared to the first nine months in 2020.

The firm also posted a 27pc increase in debt to £10.6bn as it was forced to borrow cash to keep itself afloat during the pandemic.

Despite this, IAG boss Luis Gallego was positive about the future, saying the reopening of the US border to foreign nationals from Monday will be ‘a pivotal moment’ for the industry.

The end of the ban, which was imposed in March last year, means fully vaccinated travellers from 33 countries, including the UK, will be able to enter the US provided they have tested negative for Covid-19 72 hours beforehand.

In response to the relaxation of restrictions, IAG is planning to expand its current capacity to 60pc of pre-pandemic levels in the fourth quarter of 2021, up from 43.4pc in the prior three-month period. Gallego flagged that bookings for long-haul flights, a significant driver of revenues for the company, were recovering faster than short-haul trips as it headed into the winter season.

He also noted ‘early signs of a recovery in business travel’ as executives resumed jetting back and forth between major corporate hubs in the UK and Europe and the East Coast of the US.

‘There’s a significant recovery underway and our teams are working hard to capture every opportunity. We continue to capitalise on surges in bookings when travel restrictions are lifted’, Gallego added.

The shares jumped 6.1pc, or 10.38p, to 180.16p on the back of the news.

However, some analysts were sceptical about the potential recovery of businessrelated travel, with AJ Bell investment director Russ Mould saying the odds that the number of corporate flyers will return to pre-pandemic levels, particularly in the near term, ‘look slim’.

He also noted that the British Airways brand could have suffered heavy reputational damage due to its ‘rather miserly approach to refunds during lockdown’.

The airline refused to reimburse passengers for flights they legally were barred from taking due to travel restrictions.

Analysts at Liberum were more upbeat, however, saying IAG had ‘a clear recovery path’ which was not currently reflected in the share price.