IAG records biggest loss on record as plane lands in pandemic
British Airways owner IAG suffered the biggest loss in history as the coronavirus pandemic closed borders and ground his plane.
The airline group, which also owns Iberia, Aer Lingus and Vueling, posted a full-year operating loss after one-off items of 7.4 billion euros (£ 6.5 billion), the worst since its creation ten years ago.
The loss is one of the biggest for UK companies in 2020. Oil majors Shell and BP are the only companies in the FTSE 100 to lose more money over the period, according to data from Refinitiv, although all companies haven’t reported it yet.
The pandemic has destroyed IAG’s business model, which is geared towards highly profitable corporate customers and long-haul routes. Border restrictions are in place in many of its key airlines’ markets, including the UK and US, and the industry’s immediate outlook is still grim.
IAG plans to steal about 20% of its 2019 schedule in the first quarter of this year, and has said it is focusing on increasing cash flow and reducing costs.
But since large numbers of people in developed countries are vaccinated, airline executives hope the industry can recover in the second half of this year.
IAG chief executive Luis Gallego said 2020 has been a year of crisis for his industry, but infection rates are “going in the right direction.”
Turnover fell 69% over the year to 7.8 billion euros, the airline group having only completed a third of its normal program in 2020.
IAG amassed € 10.3 billion in cash to help it survive the collapse in passenger numbers, but like many of its peers, the race to collect cash has kept it increasingly in debt. The company’s net debt stood at 9.8 billion euros at the end of the year, up almost 30% from the previous year.
The loss included one-off items, including fuel and currency hedges, early fleet decommissioning and restructuring costs. Excluding these items, IAG lost 4.4 billion euros, slightly better than analysts’ expectations.