On Friday, International Airlines Group (IAG) released its Q2 results, which showed progress in the consortium’s recovery from the epidemic. The parent company of British Airways, Iberia, Vueling, Aer Lingus, and LEVEL, as well as other European airlines, announced an operating loss of €967 million ($1,148 million), compared to a restated loss of €2,182 million ($2,592 million) for the same period in 2020.
“All of our airlines continue to take major efforts to protect their strength through the present pandemic and to prepare them for recovery,” said IAG CEO Luis Gallego. We continue to strengthen our resilience through preserving cash, increasing liquidity, and lowering our cost base. The Group’s liquidity on June 30 was €10.2 billion ($12.11 billion), with a significant improvement in operating cash flow compared to previous quarters.
“In the long run, we are preparing our business to emerge stronger and more competitive in a structurally changing industry.” For example, we are speeding up the digitalization of our business, and our labor agreements enable us to boost efficiency and lower our cost base while increasing the amount of variable costs.”
Mr. Gallego named Iberia and Vueling, both based in Spain, as the greatest performers for the quarter, citing “stronger Latin American and Spanish domestic markets driven by less travel restrictions.” On the contrary, the United Kingdom and Ireland have had some of the most stringent limitations on international passenger arrivals in the region.
This has hampered British Airways and Aer Lingus in stimulating demand and rebuilding passenger confidence in air travel, resulting in IAG drawing £2.0 billion ($2.79 billion) from UK Export Finance for British Airways and €75 million ($89 million) from the Ireland Strategic Investment Fund for Aer Lingus in the first six months of 2021, from debt facilities agreed upon in 2020.
Capacity for the quarter was 22 percent of pre-pandemic levels across the group, but this is expected to grow to 45 percent for Q3, which includes the summer months. Mr. Gallego stated that the firm intends to prepare for 75 percent of 2019 levels in the final three months of 2021, albeit actual achievement will be contingent on a number of events beyond IAG’s control.
The most important of them is the full restoration of the trans-Atlantic travel corridor, which accounts for a large portion of British Airways’ network. According to the Guardian, Mr. Gallego recognized this during the announcement by telling reporters that “the weight of our network is balanced to the Atlantic.”
IAG’s fortunes will be boosted this week by news that the UK will waive quarantine and self-isolation restrictions for tourists arriving from the United States and the European Union beginning Monday, August 2, as long as the countries remain off the ‘Red List.’ However, President Joe Biden last week ruled out any form of reciprocal arrangement for British and European visitors entering the US in the near future.
