British Airways’ parent company lost £6.3m per day in 2021 – but predicts ‘strong recovery’

The chief executive of IAG, the parent company of British Airways, says he is “confident that a strong recovery is under way” – despite Russia’s attack on Ukraine and continuing Covid travel restrictions.

Luis Gallego was speaking as the firm – which also owns Aer Lingus and Spanish airlines Iberia and Vueling – revealed heavy losses for 2021.

IAG lost an average of £6.3m per day in 2021. But the total statutory operating loss of €2.7bn (£2.3bn) was barely one-third as bad as in 2020.

“The easing of government-imposed travel restrictions as the year progressed resulted in improving travel demand, in particular following the opening of the US border to foreign travellers on 8 November,” IAG’s financial statement said.

“The impact of Omicron, which became apparent on 25 November, had a negative short-term impact on the operating result, passenger bookings and cancellations.

“Omicron has affected bookings in January and February 2022 but has had a minimal impact on bookings for Easter and summer 2022.”

The firm is planning to offer about 65 per cent of 2019 capacity in the first three months of 2022,  increasing to around around 85 per cent of 2019 capacity for the full year.

Mr Gallego said: “All our airlines continued to show improvements in the fourth quarter, optimising their performance and further improving their operating results.

“Our diversified business model enabled us to make the most of the recovery as individual markets were affected at different times and in different ways.

“Premium leisure has performed strongly at both British Airways and Iberia, while business travel has started to recover especially on the transatlantic routes.”

He said that Iberia had actually made a €82m (£69m) operating profit in the last three months of 2022.

“Prior to Omicron, long-haul traffic had seen the highest booking activity in October and November at over 80 per cent of 2019 levels,” he said.

“This was driven by the re-opening of the North Atlantic corridor and the strength of long-haul leisure markets and travellers visiting families and friends.

“Demand slowed down for very near-term trips following the emergence of Omicron in late November. However, bookings have remained strong for Easter and summer 2022 having picked up in the New Year. We expect a robust summer.

“We are also monitoring recent geopolitical events closely to manage any potential impact.

“We know that after the worst crisis in aviation’s history we must do things differently. Our model enables us to capture revenue and cost synergies while maximising efficiencies, which means we are set up to return to profitability in 2022.”

The company says the prediction assumes “no further setbacks related to Covid-19 and government-imposed travel restrictions or material impact from recent geopolitical developments”.