COVID-19: British Airways parent firm demands digital health passes to help reopen skies as it dives to £6.5bn loss
IAG says that when the time is right to unlock international travel, there should be a global approach to ensure a smooth landing.
Friday 26 February 2021 10:17, UK
The parent firm of British Airways has called for the introduction of digital health passes to help reopen the skies while revealing a €7.4bn (£6.5bn) annual loss as a result of coronavirus pandemic disruption.
International Airlines Group (IAG) demanded a global approach, with common testing standards, as the travel industry reels from a disastrous 12 months that has largely grounded fleets and led to tens of thousands of job losses.
The operating loss revealed by the company, which also includes Iberia and Aer Lingus among its stable of airlines, compares with profits of €2.6bn (£2.2bn) during 2019 - before COVID-19 struck its operations.
Live COVID updates from the UK and around the world
Much of the bottom line loss was blamed on a pre-tax charge of just over €3bn (£2.6bn) on fuel and foreign exchange hedge accounting being discontinued, writedowns on the value of its fleet and restructuring costs.
The bulk of the sum, however, was down to a cash burn of almost €80m (£69.7m) a week.
In the case of British Airways - IAG's flagship airline - it has shed around 13,000 staff and scrapped its entire fleet of Boeing 747 Jumbos as part of efforts to shape itself for a post-crisis rebirth.
It was announced just on Monday that an additional £2.45bn of liquidity had been secured for BA through loans and pension contribution deferrals, and IAG said on Friday that it did not anticipate that further funding would be needed.
Group capacity - the number of flights operating - was cut by two thirds over the year and was at a quarter of normal levels during the final three months of 2020 but were loss-making because many planes were half empty.
Cargo volumes were one bright spot for the company.
Another was that, like travel industry rivals, IAG said it had seen a big pick-up in bookings since Boris Johnson revealed his roadmap out of lockdown and it was expecting a good summer as a result of easing restrictions globally.
But Luis Gallego, who took over as IAG's chief executive in October last year from Willie Walsh, said it was imperative that countries work together to prepare for the unlocking of the global economy.
He told investors: "The aviation industry stands with governments in putting public health at the top of the agenda.
"Getting people travelling again will require a clear roadmap for unwinding current restrictions when the time is right.
Subscribe to the Daily podcast on Apple Podcasts, Google Podcasts, Spotify, Spreaker
"We know there is pent-up demand for travel and people want to fly.
"Vaccinations are progressing well and global infections are going in the right direction.
"We're calling for international common testing standards and the introduction of digital health passes to reopen our skies safely."
The UK government is examining the merits of so-called vaccine passports while EU leaders are divided on the issue.
IAG shares, up 16% in the year to date after a disastrous 2020, fell by more than 2% at the market open.
Jack Winchester, analyst at Third Bridge, said of IAG's figures: "Investors have been willing to plug IAG's finances on the assumption of an eventual recovery, but when the dust settles we are likely to see that low cost carriers like Ryanair and Wizz Air have come out of 2020 in far better shape.
"Although travel agents have seen a spike in bookings, since Boris Johnson's recent roadmap was announced, a question mark still hangs over when it will be practical for British nationals to take foreign holidays again.
"While the UK's infection rates are falling and vaccination rates are climbing, things aren't yet moving as quickly in Europe, and this is vital to the health of IAG."