IAG, the group that owns airlines such as Iberia, British Airways or Vueling, lost a total of 6,923 million in 2020 Euros due to the collapse of air traffic as a result of the pandemic. In 2019, it had obtained a profit of 1,715 million euros, according to the group this Friday.
The various restrictions on mobility imposed by governments to curb the pandemic reduced passenger capacity in all of 2020 to 33% With respect to 2019 and for this first quarter of 2020, I expect to fly only 20%.
Revenues plummeted 69% (to 7,806 million) due to the fall in activity (from March to June the planes were on the ground). In addition, the group has had to face an exceptional charge of 3.061 million related to the purchase of fuel (the price plummeted in March when it stopped flying) and the deterioration of the aircraft fleet.
In the fourth quarter alone, losses amounted to 1,471 million, compared to the profit of 93 million reached the year before the health crisis.
Cost reduction
“Our results reflect the tremendous impact that the pandemic has had in our business. We have taken effective measures to preserve cash, strengthen liquidity and reduce our cost base, “said Luis Gallego, CEO of IAG.
IAG was able to reduce costs (excluding fuel) by 37% and the group “continues to reduce costs and increasing the variables “to adapt them to demand”. The airline industry has a fixed cost structure (aircraft, maintenance, fuel …) greater than other sectors, and it costs more to adapt in crisis like the current one.
IAG is reducing its fleet of aircraft (most were idle during lockdown) to accommodate current demand. “We are transforming our business to ensure that we emerge from the crisis in a stronger competitive position”, in the words of Gallego.
The group’s liquidity at the end of the year was 10,300 million, (higher than before the pandemic) including the 2,700 million euros obtained after the capital increase announced last July to face this crisis.
Forecasts
Given the current uncertainty, the group expects to fly 20% in this first quarter of 2021 with respect to the capacity of 2019, but these plans “remain uncertain and are subject to review,” the group notes.
In a statement, Gallego asks for a clear roadmap regarding the lifting of current restrictions so that people can fly again when the time is right.
“We know that there is a pent up travel demand and that people want to fly. Vaccinations are progressing well and global infections are going in the right direction. We ask for common international standards regarding testing and the implementation of digital health cards to reopen our skies safely. “
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