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IAG Loses $2.24 billion in 2020 Third Quarter, With No Sign of Immediate Recovery

The parent company of Aer Lingus, British Airways and Iberia says the COVID-19 pandemic is continuing to create a crisis “with no sign of immediate recovery.” The airline conglomerate posted a $2.24 billion operational loss in the 2020 third quarter, with the fourth quarter looking even more lean.

Between leadership changes and accelerated aircraft retirements at British Airways, International Airlines Group posted their second consecutive loss in the third quarter of 2020, fueled by the COVID-19 pandemic. The group lost a reported $2.24 billion (€1.918 billion) over the three-month period ending Sept. 30, 2020.

Airline Industry Shows “No Immediate Signs of Recovery” from Pandemic

In an attempt to reduce the cash bleeding as a direct result of the pandemic, the airlines of IAG increased some operations to meet summer leisure travel demand, while operating over 1,000 more cargo flights. But flyer traffic remained incredibly low, with passenger capacity down 78.6 percent compared to the same three months in 2019.

In addition, exit costs for around 10,000 employees of Aer Lingus and British Airways cost the company a one-time cost of around $321.84 million. However, the conglomerate was also able to reduce their operating costs by 54 percent through wage support schemes, employee cost reductions and supplier cost reductions. Their average burn rate for the quarter was around $240 million per week.

“These results demonstrate the negative impact of COVID 19 on our business but they’re exacerbated by constantly changing government restrictions,” Luis Gallego, the new chief executive of IAG, said in a press release for his first quarterly report as leader. “This creates uncertainty for customers and makes it harder to plan our business effectively.”

The quarter wasn’t all terrible for the airline operator during the quarter. The company received a cash influx of over $900 million from American Express, on the agreement to purchase Avios as rewards for cardholders. The company also successfully raised around $3.16 billion in capital, to improve their liquidity.

Group Calls for Additional Pre-Departure COVID-19 Testing Requirements

As the airline group deal with another lockdown of England to prevent the spread of COVID-19, leaders for IAG are calling for their respective nations to create Coronavirus testing options for travelers. Yet, Gallego warns that they aren’t the complete solution to help the aviation industry recover, saying they may not see flyers come back to the skies for another three years.

“We are calling on governments to adopt pre-departure testing using reliable and affordable tests with the option of post flight testing to release people from quarantine where they are arriving from countries with high infection rates,” Gallego said in the press release. “This would open routes, stimulate economies and get people travelling with confidence. When we open routes, there is pent up demand for travel. However, we continue to expect that it will take until at least 2023 for passenger demand to recover to 2019 levels.”

Feature image courtesy: International Airlines Group