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IAG Reports First Quarter Net Loss of €1.07 Billion on 79 Percent Revenue Decline to €968 Million

IAG has reported a first quarter net loss of €1.07 billion or (€0.22) per share on a 79 percent year-over-year revenue decline of 79 percent to €968 million. The Group ended the quarter with €8.0 billion in cash and €2.5 billion in undrawn credit facilities for €10.5 B in liquidity.

IAG Reports First Quarter 2021 Financial Results - Graphic Courtesy of British Airways

On Friday (May 7, 2021), the International Consolidated Airlines Group (IAG) reported their first quarter 2021 financial results for the period ending March 31, 2021. The Group reported a first quarter net loss of €1.07 billion or (€0.22) per share, compared to a net loss of €1.7 billion or (€0.55) per share during the first quarter of 2020. The company’s Q1 operating loss before exceptional items was €1.1 billion, compared to €535 million in the first quarter of 2020. IAG’s first quarter revenue declined year-over-year by 79 percent to €968 million versus €4.6 billion for Q1 2020. At March 31, 2021, the Group’s cash increased by €2.1 billion compared to Q4 2020 to €8.0 billion. When combined with committed and undrawn general and aircraft credit facilities, the company ended the quarter with €10.5 billion in total liquidity.

In Friday’s announcement, IAG’s Chief Executive Officer, Luis Gallego, said,

“In quarter 1, we’re reporting an operating loss of €1,135 million before exceptional items compared to an operating loss of €535 million last year. We’ve acted decisively to build resilience by boosting liquidity and reducing our cost base. At March 31, the Group’s liquidity increased to €10.5 billion which demonstrates IAG’s good access to capital markets. Cargo has enabled us to operate a more extensive passenger long-haul network. In addition, we operated 1,306 cargo-only flights and generated €350 million in revenue, a record for quarter 1. We’re taking all necessary actions to ensure the financial health of our business for the long-term, including last year’s successful €2.7 billion capital increase, and remain focused on reducing our cost base and increasing efficiencies.

“Despite the challenges posed by the current pandemic, our focus on the safety of our people and customers remains paramount alongside our climate commitments. Our pledge to powering 10 per cent of our flights with sustainable aviation fuel by 2030 shows that we will not back down from our ambition to lead aviation’s efforts to reduce its carbon footprint. We’re doing everything in our power to emerge in a stronger competitive position. We’re absolutely confident that a safe re-start to travel can happen as shown by the scientific data. We’re ready to fly, but government action is needed through four key measures:

• Travel corridors without restrictions between countries with successful vaccination rollouts and effective testing such us the UK and the US.

• Affordable, simple and proportionate testing to replace quarantine and costly, multi-layered testing.

• Well-staffed borders using contactless technology including e-gates to ensure a safe, smooth flow of people and frictionless travel.

• Digital passes for testing and vaccination documentation to facilitate international travel.

“These measures will enable a safe re-opening of our skies. Travel underpins a global industry that supports 13 million jobs in Europe alone. There’s a high level of pent-up demand and aviation will play a critical role in reconnecting people and getting economies back up and running again.”

Due to the ongoing global COVID-19 pandemic and associated travel restrictions, IAG was only able to operate at 20 percent capacity compared to Q1 2019 and 22 percent capacity compared to Q1 2020. During the first quarter, the Group operated 1,306 additional cargo flights and reported record cargo revenue of €350 million, a 42 percent increase compared to the same period last year.

IAG continues to take actions to preserve cash and bolster liquidity. During the first quarter, the company drew down on debt facilities agreed to in 2020 including £2.0 billion for British Airways from UK Export Finance and €75 million for Aer Lingus from the Ireland Strategic Investment fund. The Group also closed a senior unsecured bond issue in the quarter, raising €1.2 billion, with €500 million and €700 million maturing in 2025 and 2029 respectively. Additionally, IAG signed a $1.76 billion Committed Secured Revolving Credit Facility with a syndicate of banks, which is available for three years plus two consecutive one-year extensions (at the discretion of the lenders).

IAG's Frist Quarter 2021 Performance Summary and Consolidated Income Statement - Courtesy IAG

The Group believes that air travel demand will not return to 2019 pre-pandemic levels until at least 2023. Therefore, IAG is actively restructuring its cost base to adjust to significantly lower demand, including actions to reduce fixed costs and to increase the variable proportion of the cost structure. IAG’s employee costs for the first quarter decreased by €612 million versus Q1 2020, primarily attributable to restructuring programs introduced in 2020, together with furlough and other temporary cost reduction schemes.

The International Consolidated Airlines Group (IAG) is one of the world’s largest airline groups with a fleet of 533 aircraft. Prior the global COVID-19 pandemic, the Group’s airlines served 279 destinations, carrying around 118 million guests annually. Shares in the company trade on the London Stock Exchange and the Spanish Stock Exchange. IAG is the parent company of British Airways, Aer Lingus, Iberia, Vueling and Level.

In trading Friday (5/7/21), shares in IAG (LSE: IAG) were up 0.29 percent to €2.39/share (3:05 PM BST).

Source: International Airlines Group (IAG)


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