British Airways cuts more flights after IAG’s £1.2bn loss

Simon Foy
·2-min read
BA planes
BA planes

The owner of British Airways has been forced to slash capacity again over winter after plunging to a €1.3bn (£1.2bn) third quarter loss.

IAG is to fly no more than 30pc of usual flights between October and December as it struggles with huge uncertainty over the second wave of Covid, down from a previous plan to fly 40pc.

The FTSE 100 firm has scrapped its target to break even in the fourth quarter, despite a brutal programme of cost cutting which includes more than 10,000 redundancies at BA. 

Revenue at IAG, which also owns Aer Lingus and Spanish brand Iberia, fell 83pc to €1.2bn for the three months to September 30, down from €7.3bn for the same period last year after a collapse in passenger numbers.

The company's €1.3bn operating loss follows a €1.4bn profit last year. 

A host of other carriers including Ryanair and easyJet have already slashed capacity for the winter due to poor demand as would-be travellers are hit by tougher restrictions.

IAG finance chief Stephen Gunning said: “Recent overall bookings have not developed as previously expected due to additional measures implemented by many European governments in response to a second wave of Covid-19 infections, including an increase in local lockdowns and extension of quarantine requirements to travellers from an increasing number of countries.” 

The gloomy update highlights the deep and protracted crisis facing the industry. 

After failing to enjoy much of a recovery during the summer because of travel restrictions, the sector faces months more pain as its moves into the loss-making winter season with the virus once again surging across the continent. 

IAG said that governments' plans to replace draconian quarantine measures have moved slowly and this has hit demand. 

Mr Gunning said: “Initiatives designed to replace quarantine periods and increase customer confidence to book and travel, such as pre-departure testing and air corridor arrangements, have not been adopted by governments as quickly as anticipated."

Despite the weak performance, IAG said it still has access to reserves of €6.6bn including €5bn in cash.

The company last month tapped shareholders for €2.74bn in a deeply discounted rights issue. 

Shares fell more than 5pc before regaining some ground to be 1.3pc lower at 99p in morning trading. The stock was trading above 250p at the beginning of the year. 

Gatwick

Meanwhile, regulators have given Gatwick permission to increase what it charges carriers in line with inflation. 

The Civil Aviation Authority backed proposals by Britain’s second busiest airport for a cap on rises of the retail prices index. The regulator refused to sanction Heathrow’s plans to hike charges by £1.7bn earlier this month.

Regulators said Gatwick’s commitment to invest at least £120m-a-year into the airport was sufficient.

The CAA will now consult other industry players on the proposals.