British Airways’ owner, International Airlines Group, has announced plans to gradually return more planes to the skies after reporting a €2bn loss for the first half of 2021.
International Airlines Group (IAG) said it hoped to raise passenger capacity for the pivotal summer period to about 45% of its 2019 pre-pandemic capacity, up from only 20% for the first six months of the year, with hopes that its lucrative transatlantic UK-US routes could reopen fully in September.
However, the airline group said its plans “remain uncertain and subject to ongoing review”. BA flights will remain at about 30% of normal capacity, with the bulk of the recovery coming at its Spanish sister airlines Iberia and Vueling.
Government restrictions on travel hindered IAG’s financial results, which barely improved in the second quarter from the first three months of the year despite the easing of most Covid lockdown rules. IAG said that for BA, its biggest carrier, “the restricted nature of the green list severely limited the recovery in capacity expected on the lifting of lockdown restrictions”.
Iberia and Vueling were the best performers in the group, with relatively few restrictions on their routes from Spain and Latin America.
IAG’s chief executive, Luis Gallego, said the UK government allowing quarantine-free travel to fully vaccinated travellers from amber countries in the EU and US was an “important first step” to reopening transatlantic flights.
“We are reaching the light at the end of the tunnel. In the short-term, our focus is on ensuring our operational readiness, so we have the flexibility to capitalise on an environment where there’s evidence of widespread pent-up demand when travel restrictions are lifted.
“We know that recovery will be uneven but we’re ready to take advantage of a surge in air travel demand in line with increasing vaccination rates.”
Bookings from the US doubled after the announcement compared with the previous week, BA’s chief executive, Sean Doyle, said.
Gallego said the group would be ready to fly up to 75% of pre-Covid capacity by the autumn, should restrictions lift further.
Gallego and Doyle said there were encouraging signs of growth in the business travel market, where airlines have come under more pressure in the pandemic as multinational executives attend Zoom conferences and webinars rather than fly to meetings. Gallego said IAG expected business travel to still be 10-15% lower than 2019 by 2023, adding: “We are seeing in Spain that they are reaching 30% of business capacity … Business traffic is coming back.”
Doyle said: “We anticipate a lagging recovery compared to leisure traffic.” But, he said, in the US domestic airline market, “business travel is recovering ahead of the anticipation of the carriers. We’re encouraged by the rebound”.
IAG recorded a €2.3bn (£1.7bn) pre-tax loss for the first half of 2021. It said it would not guide on full-year profits given the continuing uncertainty over the pandemic and government travel restrictions.
It comes after the airline’s budget competitors Ryanair, easyJet and Wizz Air set out plans earlier this week to increase capacity closer to pre-Covid levels amid a sharp rise in holiday bookings.
All three, particularly Wizz, have large operations in Europe outside of the UK, where they are currently operating in less restrictive conditions. EasyJet expects to return to 60% of pre-Covid levels during the summer holiday season, while Wizz expects to be the first major airline to return to pre-pandemic capacity in August.
Doyle said that the much-amended traffic light system and quarantine requirements had left Britain “two months behind” Europe, adding that he hoped that other announcements on easing the testing regime could follow: “It’s out of kilter with other markets.”