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International Airlines Group, the parent company of British Airways, and Aer Lingus, Iberia, LEVEL and Vueling has released its preliminary first quarter results for 2020.
Total revenue in the first quarter fell 13% to €4.6 billion compared to €5.3 billion last year. IAG reported a loss before exceptional items of €535 million compared to a profit of €135 million last year.
IAG has also taken an exceptional charge of €1.3 billion. This is due the ineffectiveness of fuel and foreign currency hedges for 2020 due to over-hedging. Put simply, this means IAG has not been able to benefit from significant falls in fuel prices in recent weeks.
IAG airlines have reduced capacity by nearly 95% in April and May. The group has not announced any capacity plans for June which are subject to both the easing of country lockdowns and the lifting of travel restrictions.
Industry views on how long it will take for demand to return to 2019 levels vary widely.
Most optimistic is Michael O’Leary who believes that, with significant discounting, demand will recover quite quickly. Many airlines believe it will take around 3 years for demand to recover and demand will remain subdued well in 2021.
IAG has said today that it expects it to take several years for demand to return to 2019 levels.
British Airways Restructuring
British Airways has begun a consultation with its trade unions on a redundancy exercise.
This may affect up to 12,000 BA employees. To put this into context, BA has approximately 40,000 employees. 22,626 employees were furloughed in April.
Whilst this will clearly have a significant impact on the livelihoods of many BA staff, the number of 12,000 is a likely worst case scenario to open negotiations with BA’s trade unions. It is likely that this will be achieved through voluntary redundancy as much as possible which is a “red line” for trade unions.
BA is also likely to be receptive to other cost savings suggestions, particularly productivity improvements.
It also points to a significant reduction in capacity in the coming years and, in turn, many changes to BA’s airports, route network and fleet.
Continue reading “British Airways Prepares To Restructure Post COVID-19”











