International Airlines Group Third Quarter Results

IAG has reported an operating loss of €1.3 billion for the third quarter of 2020.

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International Airlines Group Tailfins
International Airlines Group Tailfins

International Airlines Group, the parent company of Aer Lingus, British Airways, Iberia, LEVEL and Vueling released its third quarter results today, Friday 30 October 2020.

The results themselves revealed few surprises. IAG had already announced last week an operating loss of €1.3 billion. Air France KLM also reported an operating loss of €1.05 billion today.

IAG’s loss was not broken down by airline but at BA passenger numbers fell year-on-year by 85.2% from 13,042,000 to 1,927,000. Load factor fell by 43.4 percentage points from 86.3% to 42.9%.

IAG’s liquidity currently stands at €9.3 billion. The group is also looking at additional measures to raise cash such as the sale and leaseback of aircraft and new sources of debt.

This will also the first results announcement presented by new IAG CEO Luis Gallego, with new BA CEO Sean Doyle also present. Unlike Willie Walsh, Luis seems to prefer to keep his views on rival airlines to himself.

Overall, it was more interesting for what wasn’t said rather than what was said. IAG did not give any indications as to what capacity or the size of its fleet may be beyond this year. The group is clearly waiting for progress a COVID-19 testing regime to lift quarantine restrictions and open up travel corridors on key routes.

IAG did illustrate what happens to passenger demand as soon as quarantine restrictions are lifted. Here you can see a surge in demand for BA flights to the Canary Islands as soon as quarantine restrictions are lifted:

British Airways Bookings To Canary Islands, October 2020
British Airways Bookings To Canary Islands, October 2020 (Image Credit: International Airlines Group)

BA Restructuring

The restructuring of BA is largely complete.

9,620 employees will have left the airline by the end of October. This is primarily through voluntary redundancy. A further 180 employees will leave by the end of the year.

This is expected to achieve employee cost savings of 30% in 2021. In addition, 19,800 out of 28,000 employees now have lay-off and short-term working clauses. This is good for the airline, but not so good for employees.


Luis Gallego says no decisions have been made about BA’s long-term future at Gatwick.

Short-haul flights have been suspended until Sunday 28 March 2021 at the earliest. With the summer 2021 season just five months away, it is hard to see BA short-haul flights at Gatwick next summer.

Interestingly, nothing was said about London City where demand is likely to recover very slowly.

Fleet Plans

At the last results announcement, former CEO Willie Walsh hinted that BA may look to reconfigure long-haul aircraft to match capacity to demand.

Sean indicated that smaller First Class cabins on new and refurbished aircraft, the introduction of the Club Suite as well as expanded World Traveller Plus cabins on reconfigured Boeing 777 aircraft will enable the airline to target different demand segments as and when then recover.

Reading between the lines it seems unlikely that BA will change its focus as a premium long-haul airline (which is often mistaken for corporate traffic only). The airline has over the years developed many tools, such as proactive upgrade offers and flight & hotel deals, to encourage premium leisure passengers and trading up to premium cabins.

The view seems to be that demand across different markets (leisure, Visiting Friends & Relatives & corporate) will recover, just at different stages.

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