Tue, 24 Nov 2020

LONDON, UK - International Consolidated Airlines Group (IAG), which owns British Airways, Aer Lingus and Iberia, among other, says the group's consolidated results for the nine months to September 30, 2020 were significantly impacted by the outbreak of COVID-19, particularly from late February 2020 onwards, and with no immediate signs of recovery.

IAG reported its results for the 9 months to 30 September 2020 on Friday.

"Demand continues to be adversely affected by volatile government restrictions and quarantine requirements," a statement published by the group on Friday said.

In response to the high uncertainty of the current environment, IAG says it is now planning for capacity on the fourth quarter to be no more than 30 percent.

"As a result, the group no longer expects to reach breakeven in terms of Net cash flows from operating activities during quarter 4," the company said. "Cost reduction actions implemented across the group, included employee cost reductions in Spain through the use of ERTE arrangements and wage support schemes in Ireland and the UK, together with supplier cost reductions, leading to cash operating costs for quarter 3 reducing by 54 percent from original plans to €205 million per week."

IAG said it expended an extraordinary cost of €275 million in the third quarter related to British Airways and Aer Lingus retrenchments involving approximately 10,000 staff.

Liquidity in the third quarter was boosted by renewal of the multi-year agreement with American Express, including an €830 million payment, a significant part of which is for Avios pre-purchase."

The company also completed a €2.7 billion capital-raising in October.

Passenger capacity in the third quarter was down 78.6 percent on 2019 and for the period of nine months down 64.3 percent compared to 2019.

The third quarter operating loss was €1.3 billion before exceptional items. This compares to the third quarter operating profit of 2019 of €1.425 billion.

The operating loss before exceptional items for the nine months was €3.2 billion, compared to the 2019 operating profit: of €2.52 billion.

Luis Gallego, CEO of British Airways-owner IAG.

"These results demonstrate the negative impact of COVID 19 on our business but they're exacerbated by constantly changing government restrictions. This creates uncertainty for customers and makes it harder to plan our business effectively," Luis Gallego, IAG's Chief Executive Officer, said Friday.

"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. 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," said the IAG chief.

"The group has made significant progress on restructuring and we continue to reduce our cost base and increase the proportion of our variable costs. We have also successfully completed a €2.74 billion capital increase in the quarter. It strengthens our financial and strategic position and makes IAG better placed to take advantage of a recovery in air travel demand."

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