International Airlines Group (IAG), the group to which the airlines British Airways, Iberia, Vueling or Aer Lingus belong, suffered losses of 2,048 million euros in the first half of 2021, 46.3% less compared to the red numbers of 3,813 million that it registered in the same period of the previous year, as a result of the impact of the coronavirus pandemic and the consequent imposition of travel and border restrictions in most countries, as reported by the group this Friday to the National Commission of the Stock Market (CNMV).
Total revenue fell by 58.2%, to 2,212 million euros. Passenger revenues fell by 72.3%, to 1,141 million. The group was only able to operate a reduced flight program that left operating capacity in only 20.8% of that registered in the first half of 2019, with a slight improvement between the first and second quarters of 2021 (from 19.6% to 21.1%). However, it operated 2,677 additional cargo flights, which resulted in a record cargo revenue for the semester of € 350 million. During the first six months, IAG’s capacity, measured in seat kilometers offered (AKO), fell 52.5% compared to 2020 and 79.2% compared to 2019, registering decreases in all regions.
The result of operations, before special items and taxes, showed losses of 2,180 million euros compared to losses of 1,915 million in the first half of 2020. Despite this crisis, as of June 30, the group’s liquidity was of 10,200 million euros, although net debt grew 24% year-on-year, to 12,107 million euros.
No forecast for 2021
Given the uncertainty regarding when government-imposed travel restrictions will be removed and the continued impact and duration of the COVID-19 pandemic, IAG said it will not provide profit forecasts for 2021.
The CEO of IAG, Luis Gallego, has indicated that in the short term the priority is to ensure “that we are prepared from an operational point of view and that we have the necessary flexibility to capitalize on an environment in which there is a latent demand that is manifested as soon as travel restrictions are lifted.
“This is reflected in the results of Iberia and Vueling. In the second quarter, both companies posted the best returns within the group, as a result of lower travel restrictions in some Latin American countries and the recovery of the Spanish domestic market. We know that this recovery will not be homogeneous, but we are prepared to take advantage of an increase in travel demand as vaccination levels increase, “he added.
The Spanish executive praised the recent announcement of the British Government to exempt from quarantine passengers with a full vaccination schedule who arrive in England from the so-called amber destinations of the European Union and the United States, and hopes that it is a first step towards fully reopen the transatlantic air corridor.
This semester, the group has reduced total operating expenses by 54.5% compared to the same period of the previous year, leaving them at 4,247 million euros. Personnel expenses, for example, have plummeted 32.4% to 1,288 million euros, while landing and navigation rates have fallen 46.8% to 287 million.
On the Ryanair line
IAG’s results are in line with those published by Ryanair this week. The Irish low-cost airline lost 272.6 million euros in its first fiscal quarter (April-June), 47% more than in the same period of the previous year. Its passenger traffic increased 7.6% in the first quarter compared to 2020, to 8.1 million, while it increased its revenues by 196%, reaching a turnover of 371 million euros between the last months of April and June. .
It also improved its occupancy index, which measures the number of seats occupied on each flight, and which went from 61% to 73%, but registered an increase of 116% in operating costs, to 675 million euros.
Ryanair CEO Michael O’Leary warned that there is still “great uncertainty” in the sector, but predicted that if the pandemic does not produce “more setbacks” and the current pace of bookings is maintained, the airline could transport almost 9 million customers in July and up to 10 in August. In this context, the airline announced last month that it plans to hire more than 2,000 pilots to deal with the reactivation of the sector. It also confirmed that it expects an order for 12 new Boeing 737-8200 Gamechanger aircraft to arrive in August, after receiving the first of that batch in June.