British Airways owner IAG sees 'significant recovery' post-lockdown but losses remain massive

The boss of British Airways owner IAG said he is seeing a "significant recovery" with lockdown restrictions easing, though passenger levels remain well below pre-pandemic peaks.

Chief executive Luis Gallego said that long-haul flights in particular have pushed up sales and the group, which also owns Aer Lingus and Iberia, is on the road to profitability.

But sales remain well below pre-pandemic levels. IAG said in the three months to the end of September passenger capacity was 43.4 per cent of 2019 levels, although this was up from just 21.9 per cent in the three months to the end of June.

For the final three months of the year, passenger capacity is expected to be around 60 per cent of 2019 levels, as more countries open up to visitors.

British Airways flight BA9170E, a Boeing 747 aircraft with the registration number G-CIVD, departs from Heathrow Airport heading for Spain, as the airline last year began the final phase of retiring its iconic 747 fleet. Picture: Steve Parsons/PA Wire

Unveiling the latest figures in a trading update to investors, Gallego said: “There's a significant recovery under way and our teams across the group are working hard to capture every opportunity. We continue to capitalise on surges in bookings when travel restrictions are lifted.

“All our airlines have shown improvements with the group's operating loss more than halved compared to previous quarters.”

Operating losses in the nine months to the end of September were €2.5 billion (£2.1bn) compared with €6bn (£5.1bn) in the same period a year ago.

Pre-tax losses in the three months to the end of September were €714 million compared with some €2bn a year earlier.

Passenger revenue also improved in the quarter, hitting €2bn, up from €715m during the same period in 2020 at the height of the pandemic.

Mark Crouch, an analyst at investment platform eToro, said: “British Airways owner IAG has a long way to go to get back to profitability.

“This latest set of results are disappointing considering we’ve had staged reopening of travel for some time now. It also underscores a turbulent period for the firm which has seen some considerable PR disasters. Capacity is still only at 40 per cent of pre-pandemic levels.

“The battle over refunds with passengers during the pandemic has not been a good look. The firm also reversed course on a brand-new short haul carrier for BA – an idea which collapsed in a matter of weeks in the face of a pilot rebellion.”

Crouch added: “Make no mistake, IAG is a business in turmoil. The company has a massive amount to do to regain consumer confidence and this will affect the business’s profitability – potentially for years to come.”

Gallego said: “The full reopening of the transatlantic travel corridor from Monday is a pivotal moment for our industry.

“British Airways is serving more US destinations than any transatlantic carrier and we're delighted that we can get our customers flying again.

“Long-haul traffic has been a significant driver of revenue, with bookings recovering faster than short haul as we head into the winter.”

He also explained that premium leisure is performing strongly at both Iberia and British Airways and there are early signs of a recovery in business travel.

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