BA owner announces £3.8bn pre-tax loss after travel curbs
BRITISH AIRWAYS’ parent company IAG has announced a massive pre-tax loss of £3.8bn for the first six months of the year after Government travel restrictions led to a 98 per cent collapse in second-quarter passenger traffic.
This was down from a £900m profit in the same period last year. IAG has announced a plan to strengthen its balance sheet by raising £2.5bn through a proposed capital increase.
Chief executive Willie Walsh said: “All IAG airlines made substantial losses. As a result of Government travel restrictions, quarter-two passenger traffic fell by 98.4 per cent on a capacity reduction in the quarter of 95.3 per cent.
“We have seen evidence that demand recovers when Government restrictions are lifted. Our airlines have put in place measures to provide additional reassurance to their customers and employees on board and at the airport.”
He expects that it will take until at least 2023 for passenger demand to recover to pre-coronavirus levels.
The firm said it is restructuring its cost base to reduce each of its airline’s size.
In April it announced that 12,000 British Airways jobs could be cut.
Mr Walsh said customers with pre-existing bookings are continuing to fly to and from Spain despite the UK Government’s decision to advise against non-essential travel to the country and re-impose quarantine requirements for people returning.
He said: “People who have had bookings, they appear to continue to be travelling to and from Spain.
“Our bookings are being suppressed by Government restrictions. When the restrictions are removed we see a significant increase in bookings.”
Mr Walsh said the scale of the challenge faced by the airline industry after 9/11 in 2001 and the global financial crisis in 2009 was much smaller than what it faces due to the pandemic.
“Anyone who believes that this is just a temporary downturn and therefore can be fixed with temporary measures, I’m afraid seriously misjudges what the industry is going through,” said Mr Walsh.