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BA owner IAG to increase flights this summer as losses shrink to €2bn

BA owner IAG to increase flights this summer as losses shrink to €2bn but shares tumble as it warns of ongoing uncertainty

  • IAG hopes to increase passenger capacity between to 45% of pre-Covid levels
  • It posted a €2bn (£1.7bn) loss for first half, down from €4bn in 2020
  • Despite smaller loss, IAG shares tumbled 7.5% to 168p towards market close

IAG, the owner of British Airways, Iberia, Vueling and Aer Lingus, has announced plans to increase the number of flights this summer as it reported losses of €2billion for the first six months of this year.  

The company said it was planning to increase passenger capacity between July and September to 45 per cent of pre-Covid levels, up from just 20.8 per cent in the first half of the year, as demand for flights soars. 

It comes as the Government scrapped quarantine rules for visitors who have received two jabs in the US or Europe this week, although the rule applies only to people from amber-list countries coming into England for now.

IAG said BA suffered because of the ‘restricted’ number of countries on the ‘green’ list 

IAG is hoping to be able fully reopen its lucrative transatlantic flights between the UK and the US, but warned that its plans to increase capacity ‘remain uncertain and subject to ongoing review’.

It said British Airways suffered in the UK because of the ‘restricted’ number of countries on the ‘green’ list that ‘severely limited the recovery in capacity expected on the lifting of lockdown restrictions’.

‘Restrictions introduced by other governments on travellers from the UK in response to the delta COVID-19 variant also contributed to the low capacity,’ it added. 

Iberia and Vueling performed better thanks to fewer restrictions on its routes from Spain to South American countries like Colombia and Ecuador.

But Aer Lingus capacity continued to be ‘severely limited by the stringent restrictions put in place by the Irish government’, with passenger load factors averaging only 20 per cent. 

Overall, the group does not expect passenger demand to recover to pre-pandemic levels until at least 2023. 

It comes as travel restrictions keep changing, with a bitter row emerging today over the UK’s restrictions on France, the threat of Spain being hit by quarantine rules – and Italy refusing to exempt Brits from self-isolation. 

IAG chief executive, Luis Gallego, said: ‘In the short term, our focus is on ensuring our operational readiness, so we have the flexibility to capitalise on an environment where there’s evidence of widespread pent-up demand when travel restrictions are lifted.

‘This is reflected in Iberia’s and Vueling’s results. They were the best performers within the group in the second quarter reflecting stronger Latin American and Spanish domestic markets driven by fewer travel restrictions.’

And added: ‘We welcome the recent announcement that fully vaccinated travellers from amber countries in the EU and the US will no longer have to quarantine upon arrival in the UK.

‘We see this as an important first step in fully re-opening the transatlantic travel corridor.’

The Government scrapped quarantine rules for visitors who have received two jabs in the US or Europe this week, although the rule applies only to people from amber-list countries coming into England for now

The Government scrapped quarantine rules for visitors who have received two jabs in the US or Europe this week, although the rule applies only to people from amber-list countries coming into England for now

It comes as the company posted an operating loss of €2billion, or £1.7billion, for the half year to the end of June, which is half the loss of €4billion it made in the same period in 2020, when the pandemic started. 

Despite narrowing losses, IAG shares tumbled 6.8 per cent to 169.20p in afternoon trading on Friday and were down 7.5 per cent just after the London market close at 168p. 

Revenue declined 58 per cent to €2.2billion, with a strong performance in Cargo offset by a 72 per cent decline in passenger revenue. 

Despite the overall declines, trends did improve in the second quarter with revenue up 77 per cent from the same time in 2020.  

Gallego said British Airways saw a 95 per cent increase in the number of bookings for flights from the US to the UK shortly after Wednesday’s announcement on easing travel rules, compared with the same period last week.

Asked if the planned ending of the furlough in September could lead to more UK job losses, he replied: ‘What we would like is to have an extension of the furlough scheme until the end of the year.’

He added: ‘Right now, we are not considering to reduce jobs more, but for sure we need to see the evolution of the situation.

‘With the plans that we have right now, our plan is to fly, people want to fly, and for that we’re going to need our people.’

In April 2020 British Airways announced it would cut up to 12,000 jobs in response to the virus crisis.

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