British Airways Parent Cuts Flight Schedule to 30% of Last Year
(Bloomberg) -- IAG SA, the owner of British Airways, slashed fourth-quarter capacity and no longer expects to break even during the period as fresh travel restrictions and virus infections keep would-be travelers at home.
The airline group, which also includes Spain’s Iberia and Irish carrier Aer Lingus, now plans to operate no more than 30% of its usual schedule in the three months, according to a statement Thursday. The company had expected to gradually rebuild services and operate at 54% strength in the period.
A resurgence in Covid-19 infections that ended a comeback for summer air traffic is now bearing down on the slower part of the year. Airlines have been clamoring for an easing of European travel requirements to spur demand, but with cases rising there’s little sign authorities will comply in the near term.
IAG’s shares fell 3.6% as of 8:26 a.m. in London, extending the year’s decline to 77%.
This “demonstrates the challenges faced by legacy airlines in managing through the current crisis,” Daniel Roeska, an analyst at Sanford C. Bernstein, said in a note to clients. “Management will need to significantly lower monthly cash burn to avoid significantly depleting resources by next summer.”
IAG’s announcement comes after Deutsche Lufthansa AG said this week it would operate at a maximum of 25% capacity this quarter. Discount carriers are also feeling the pain, with Ryanair Holdings Plc planning to offer about 40% of its 2019 winter schedule and EasyJet Plc opting to fly only 25% for the fourth quarter and beyond.
In September, IAG raised 2.75 billion euros ($3.3 billion) by way of a rights offering backed by No. 1 investor Qatar Airways.
IAG said it remains well-capitalized with liquidity of 9.3 billion euros. The company also reported a third-quarter operating loss of 1.3 billion euros, with revenue plunging 83%.
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