# International Consolidated Airlines Group passenger capacity continues to be adversely affected by COVID-19 pandemic

- Link: https://www.directorstalkinterviews.com/international-consolidated-airlines-group-passenger-capacity-continues-to-be-adversely-affected-by-covid-19-pandemic/412986122
- Published: 2021-05-07T07:34:04+01:00
- Author: Amilia Stone

**[International Consolidated Airlines Group plc](https://www.directorstalkinterviews.com/ftse-company/international-consolidated-airlines-group/iag.l)**(
LON:IAG) has presented Group consolidated results for the three months to March 
31, 2021.

**COVID-19 situation and management actions:**

·      Passenger capacity in quarter 1 was 19.6 per cent of 2019 and continues to
be adversely affected by the COVID-19 pandemic, together with government restrictions
and quarantine requirements

·      Current passenger capacity plans for quarter 2 are for around 25 per cent
of 2019 capacity, but remain uncertain and subject to review

·      1,306 cargo-only flights operated in quarter 1, up from 969 in quarter 4,
2020

·      Strong liquidity, increased to €10.5 billion at the end of the quarter (from
total pro-forma liquidity of €10.3 billion at December 31, 2020), driven by successful
conclusion of financing initiatives in the quarter, together with cost actions and
UK pension contribution deferral. These included:

·      Drawdown of previously committed borrowing for British Airways (£2.0 billion
UK Export Finance) and Aer Lingus (€75 million drawn against Ireland Strategic Investment
Fund facility)

·      Additional €1.2 billion of IAG Senior Unsecured Bonds issued, with issue 
heavily oversubscribed

·      New 3-year $1.755 billion committed, secured revolving credit facility concluded
for Aer Lingus, British Airways and Iberia and which remains undrawn; cancellation
of British Airways’ previous revolving credit facility scheduled to mature in June
2021 (value at December 31, 2020: $0.8 billion)

·      Agreement for British Airways to defer monthly pension deficit contributions
totalling £450 million between October 2020 and September 2021

·      Cash operating costs for the quarter reduced to €175 million per week

IAG period highlights on results:

·      First quarter operating loss €1,068 million (2020: operating loss €1,860 
million) and operating loss before exceptional items €1,135 million (2020: operating
loss before exceptional items €535 million)

·      Exceptional credit before tax in the quarter of €67 million on discontinuance
of fuel and foreign exchange hedge accounting (2020: exceptional charge before tax
of €1,325 million on discontinuance of fuel and foreign exchange hedge accounting)

·      Loss after tax and exceptional items for the quarter €1,067 million (2020:
loss €1,683 million) and loss after tax before exceptional items: €1,124 million(
2020: loss €556 million)

·      Cash of €8.0 billion at March 31, 2021 up €2.1 billion on December 31, 2020.
Committed and undrawn general and aircraft facilities of €2.5 billion, bringing 
total liquidity to €10.5 billion.

Performance summary:

| **Reported results (€ million)** | **Three months to March 31
2021
 | Three months to March 31
2020
 | Three months to March 31
Higher /(lower)
 | 
| Passenger revenue | 459 | 3,953 | (88.4)% | 
| Total revenue | 968 | 4,585 | (78.9)% | 
| Operating loss | (1,068) | (1,860) | (42.6)% | 
| Loss after tax | (1,067) | (1,683) | (36.6)% | 
| Basic loss per share (€ cents)^(1) | (21.5) | (55.1) | (61.0)% | 
| Cash and interest-bearing deposits^(2) | 7,975 | 5,917 | 34.8 % | 
| Interest-bearing borrowings^(2) | 19,539 | 15,679 | 24.6 % | 
| ^( ) |   |   |   | 
| Alternative performance measures (€ million) | 2021 | 2020 | Higher /(lower) | 
| Passenger revenue before exceptional items | 454 | 3,953 | (88.5)% | 
| Total revenue before exceptional items | 963 | 4,585 | (79.0)% | 
| Operating loss before exceptional items | (1,135) | (535) | nm | 
| Loss after tax before exceptional items | (1,124) | (556) | nm | 
| Adjusted loss per share (€ cents)^(1) | (22.6) | (18.2) | 24.2 % | 
| Net debt^(2) | 11,564 | 9,762 | 18.5 % | 
| Net debt to EBITDA^(2) | nm | nm | nm | 
| Available seat kilometres (ASK million) | 14,796 | 67,522 | (78.1)% | 
| Passenger revenue per ASK (€ cents) | 3.07 | 5.85 | (47.6)% | 
| Non-fuel costs per ASK (€ cents) | 12.23 | 5.79 | nm |

_For definitions refer to the IAG Annual report and accounts 2020._

_Cash comprises cash, cash equivalents and interest-bearing deposits._

_^(1)The loss per share information for the three months to March 31, 2020 has been
restated to reflect the impact of the rights issue._

_^(2)The prior year comparative is December 31, 2020._

**Trading outlook**

Given the uncertainty over the timing of the lifting of government travel restrictions
and the continued impact and duration of COVID-19, IAG is not providing profit guidance
for 2021.

> **Luis Gallego, International Consolidated Airlines Group Chief Executive Officer,
> said:**
> “In quarter 1, we’re reporting an operating loss of €1,135 million before exceptional
> items compared to an operating loss of €535 million last year.
>  “We’ve acted decisively to build resilience by boosting liquidity and reducing
> our cost base. At March 31, the Group’s liquidity increased to €10.5 billion which
> demonstrates IAG’s good access to capital markets.
> “Cargo has enabled us to operate a more extensive passenger longhaul network. 
> In addition, we operated 1,306 cargo-only flights and generated €350 million in
> revenue, a record for quarter 1.
> “We’re taking all necessary actions to ensure the financial health of our business
> for the long-term, including last year’s successful €2.7 billion capital increase,
> and remain focused on reducing our cost base and increasing efficiencies.
> “Despite the challenges posed by the current pandemic, our focus on the safety
> of our people and customers remains paramount alongside our climate commitments.
> Our pledge to powering 10 per cent of our flights with sustainable aviation fuel
> by 2030 shows that we will not back down from our ambition to lead aviation’s 
> efforts to reduce its carbon footprint.
> “We’re doing everything in our power to emerge in a stronger competitive position.
> We’re absolutely confident that a safe re-start to travel can happen as shown 
> by the scientific data. We’re ready to fly, but government action is needed through
> four key measures:
> ·      Travel corridors without restrictions between countries with successful
> vaccination rollouts and effective testing such us the UK and the US.
> ·      Affordable, simple and proportionate testing to replace quarantine and 
> costly, multi-layered testing.
> ·      Well-staffed borders using contactless technology including e-gates to 
> ensure a safe, smooth flow of people and frictionless travel.
> ·      Digital passes for testing and vaccination documentation to facilitate 
> international travel.
> “These measures will enable a safe re-opening of our skies. Travel underpins a
> global industry that supports 13 million jobs in Europe alone. There’s a high 
> level of pent-up demand and aviation will play a critical role in reconnecting
> people and getting economies back up and running again.”

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