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Friday, 26 February 2021

British Airways owner records biggest loss in its history of £6.8BILLION after Covid pandemic caused revenue to slump by more than two-thirds in 2020

  • IAG's annual loss was the worst since the company's formation 10 years ago 
  • Total revenues collapsed 69% from £22.2billion to just £6.8 billion last year 
  • Business model hammered by collapse in demand from corporate customersBritish Airways owner IAG today announced the biggest annual loss in its history as the Covid pandemic closed borders and grounded its aircraft. 

    The airline group, which also owns Iberia, Vueling and Aer Lingus, announced a post-tax loss of £6billion in 2020, the worst since its formation 10 years ago. This compares with a profit of £1.48billion a year earlier.

    Revenues collapsed 69% from £22.2bn to just £6.8bn last year as the pandemic decimated the company's business model, which depends on long-haul routes and corporate customers paying business class rates 
    Despite the ugly results, IAG shares were up 4% at £1.94 in morning trading. They have jumped 13% in the last five days, after Britain's announcement on a travel restart, but over the last 12 months have lost half their value. 
    A British Airways Boeing 787 Dreamliner passenger jet coming in to land over a deserted road near Heathrow earlier this month

    A British Airways Boeing 787 Dreamliner passenger jet coming in to land over a deserted road near Heathrow earlier this month 

    The number of passengers using IAG's airlines remains significantly down on pre-pandemic levels, and fell again during the traditional peak festive season.

    Capacity for 2020 was just 33.5% of 2019 levels, and is only expected to be around 20% between January and March.

    IAG's loss is the largest for a FTSE 100 company this year aside from oil super majors Shell and BP.

    IAG chief executive Luis Gallego said the results 'reflect the serious impact that Covid-19 has had on our business'.

    Getting people travelling again will require 'a clear road map for unwinding current restrictions when the time is right', he said'We know there is pent-up demand for travel and people want to fly.

    'Vaccinations are progressing well and global infections are going in the right direction.

    'We're calling for international common testing standards and the introduction of digital health passes to reopen our skies safely.'

    Mr Gallego said IAG airlines will not require passengers to prove they have been vaccinated against Covid-19.

    Testing will be key for travel until vaccines have been rolled out across the world, he added.

    Australian airline Qantas has said in future it will require passengers to prove they have received a jab before they can board its international flights.

    Mr Gallego said there was a 'big increase' in demand for travel after Prime Minister Boris Johnson announced his plan for easing restrictions in England on Monday.

    Flight bookings were up by more than 60% compared with the same day during the previous week.

    'If we continue with the road map to open aviation, we are going to have positive summer,' Mr Gallego said.

    He revealed that IAG will contribute to a Government taskforce evaluating how foreign travel can resume. 

    Commenting on IAG's full-year results, Julie Palmer, partner at Begbies Traynor, said: 'Covid-19 has had a devastating effect on the travel sector, and for airlines, it has caused their finances to nose dive as countries across the globe have closed their borders and put restrictions on movement.

    'For IAG, it has led to plummeting demand, early retirement of fleets, the possibility of more cuts to employee numbers and a need to boost its cash flow through sales and loans. Despite this it has to plan for the future and is doing so with greater investment in fuel-efficient aircraft on the cards.

    'This industry is one that is watching the global vaccine roll-out even closer than others and its success has lifted hopes of international travel returning soon, but for now, IAG needs to weather the storm and wait for clearer skies if it's going to stand any chance of recovery.' 

    The number of passengers using IAG's airlines remains significantly down on pre-pandemic levels, and fell again during the traditional peak festive season. Pictured is a deserted Terminal 2 at Heathrow

    The number of passengers using IAG's airlines remains significantly down on pre-pandemic levels, and fell again during the traditional peak festive season. Pictured is a deserted Terminal 2 at Heathrow 

    It comes as the first couple released from 10 days of gruelling quarantine in an airport hotel at midnight punched the air and celebrated their new-found freedom by treating themselves to a meal at McDonald's.

    Removal man Wagner Araujo, 43, and his 40-year-old wife Elaine, from Finchley, London, were among the first of those quarantined after flying into Britain to be freed from their confinement.

    They left the Radisson Blu hotel at London Heathrow Airport smiling and said after they had tucked into their McDonald's chicken burgers and fries they would be heading straight home to hug their children.

    Speaking exclusively to MailOnline, mother-of-four Mrs Araujo said she was going to shower her sleeping children with 'kisses and give them big cuddles', while her husband added: 'It has been tough at times, and a bit crazy.'

    Mr Araujo said: 'It has been an expensive time. But it has been an experience. I'm just so happy that we are out at last. To look up at the sky and feel the fresh air and of course to have a McDonald's outside the hotel.'

    His wife said of their children: 'I have missed them so much I can't tell you. It has been the hardest thing. But it will be a nice surprise for them because they're not expecting us now.'

    The first couple released from hotel quarantine at midnight after 10 days of detention punched the air and celebrated by going straight to a McDonald's

    The first couple released from hotel quarantine at midnight after 10 days of detention punched the air and celebrated by going straight to a McDonald's 

    Around 1,200 people are currently in a number of Government-approved quarantine hotels to prevent mutant variants of coronavirus from high-risk countries including Portugal from spreading around the UK.

    MPs were told this week that more than 100 people a day are going into the hotels at London Heathrow Airport, where they must stay for 10 days at a cost of £1,750 for the accommodation on risk of criminal prosecution.

    Arrivals who lie about where they have been could be jailed for a maximum of 10 years, and if they leave before the end of quarantine they could be fined a maximum of £10,000.

    Health Secretary Matt Hancock's extreme border crackdown sparked criticism from a chorus of lockdown opponents including senior Tory MP Sir Charles Walker and former Supreme Court judge Lord Sumption.

    However, the Government has not yet released data on how many people have tested positive for coronavirus since going into a quarantine hotel, with ministers expected to publish an update in the coming weeks. 

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