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IAG (IAG.L), the owner of British Airways, has warned of a €3bn (£2.6bn, $3.5bn) full-year loss this year, after flying only 43% of its normal schedule in the third quarter.
The company posted heavy losses over its summer period thanks to varying travel restrictions across the globe, although numbers are beginning to improve. Although passenger capacity was low, it was up from 21.9% in the three months to the end of June.
Due to a “significant” industry-wide recovery as the global economy bounces back from the pandemic, it is set to increase capacity numbers to 60% in the last quarter of the year.
It is hoping for a stronger final three months as transatlantic flights have resumed. The group is also hoping to return to profitability in 2022 if it reaches pre-COVID levels in the peak summer season.
During the period, pre-tax loss narrowed from €2bn to €714m when compared to the same time a year ago.
“There's a significant recovery underway 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,” Luis Gallego, chief executive of IAG, 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.”
In October, the UK government gave the industry a boost, cutting the number of countries on the red list, which has the toughest restrictions, from 54 to just seven.
COVID-19 testing rules were also simplified with PCR tests for international travellers scrapped last month.
However, the firm, which also owns Iberia, Aer Lingus, and Vueling, admitted its smaller airlines have been outperforming British Airways, which is reliant on the North Atlantic market.
Both Iberia and Vueling strengthened their positions on routes to Latin America and the Spanish domestic market, while Iberia returned to profitability.
Gallego added: “Our teams are creating opportunities and implementing initiatives to transform our business and preparing it for the future so that we emerge more competitive.
“This includes initiatives such as our new short-haul operation at Gatwick, Vueling’s expansion at Paris-Orly, Aer Lingus’ services from Manchester to the US and the Caribbean and our new maintenance model in Barcelona.”
Shares at IAG were 2.4% down on the day in London, making it one of the biggest losers on the FTSE 100.
Russ Mould from AJ Bell said the results showed that the airline was “still stuck on the runway”.
“The best news for IAG in recent weeks has been the reopening of travel to North America. The long haul route from London and New York had been British Airways’ jewel in the crown for some time and if the business is to truly shine it needs a steady flow of passengers between the two cities.
“This dependence on long haul flights has been reinforced after IAG’s apparent adoption of a plan to launch a budget short-haul carrier was abandoned almost as soon as it was announced recently,” he said.
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