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IAG Reports Fourth Quarter Net Loss of €1.4 Billion, Full Year 2020 Net Loss of €6.9 Billion

IAG has reported a fourth quarter net loss of €1.4 billion on a 79 percent revenue decline to €1.3 billion and a full year 2020 net loss of €6.9 billion on a year-over-year revenue decline of 69 percent to €7.8 billion.

IAG Reports Fourth Quarter and Full Year 2020 Financial Results - Courtesy IAG

On Friday (February 26, 2021), The International Consolidated Airlines Group (IAG) reported their fourth quarter and full year 2020 financial results. For the fourth quarter, the Group reported a net loss of €1.4 billion on a 79 percent decline in revenue versus Q4 2019 to €1.3 billion. For the full year 2020, IAG reported a net loss of €6.9 billion on a year-over-year revenue decline of 69 percent to €7.8 billion. Passenger capacity for the fourth quarter was 27 percent compared to Q4 2019 and full year capacity was 34 percent versus the previous year.

As of December 31, 2020, the Group had cash and cash equivalents totaling €5.9 billion, down €766 million from December 31, 2019. The company also closed the year with undrawn general and aircraft facilities of €2.14 billion, bringing their total liquidity position to €8.1 billion. When €2.2 billion in proceeds from the UK Export Finance (UKEP) is included, the company’s total pro-forma liquidity is €10.3 billion.

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

“In 2020, we’re reporting an operating loss of €4,365 million before exceptional items compared to an operating profit of €3,285 million in 2019. Total operating losses including exceptional items relating to fuel and currency hedges, early fleet retirement plus restructuring costs came to €7,426 million. Our results reflect the serious impact that COVID-19 has had on our business. We have taken effective action to preserve cash, boost liquidity and reduce our cost base. Despite this crisis, our liquidity remains strong. At 31 December, the Group’s liquidity was €10.3 billion including a successful €2.7 billion capital increase and £2 billion loan commitment from UKEF. This is higher than at the start of the pandemic.

“In 2020, our capacity decreased by 66.5 per cent while our non-fuel costs went down 37.1 per cent thanks to the extraordinary effort across our business. The Group continues to reduce its cost base and increase the proportion of variable costs to better match market demand. We’re transforming our business to ensure we emerge in a stronger competitive position. IAG Cargo’s turnover increased by almost €200 million to €1.3 billion. Cargo helped to make long-haul passenger flights viable. In addition, we operated 4,003 cargo-only flights in the year.

“I would like to thank our employees across the Group for their remarkable commitment, resilience and flexibility through this crisis. They have adapted quickly to new ways of working and made big sacrifices in terms of salary and working time. Our people have played a central role in all we have achieved during these challenging times. “The aviation industry stands with governments in putting public health at the top of the agenda. Getting people travelling again will require a clear roadmap for unwinding current restrictions when the time is right. 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.”

IAG's Consolidate Income Statement for Fourth Quarter and Full Year 2020 - Courtesy IAG

During the year, all four of IAG’s operating companies saw a significant decline in passenger revenues due to the global COVID-19 pandemic and took measures to reduce cists and preserve liquidity. British Airways, Iberia and Aer Lingus benefitted from additional cargo flights and higher yields, with both British Airways and Air Lingus outperforming 2019 cargo revenues. Employee costs were reduced due to the use if wage support and redundancy schemes, particularly in the UK and Ireland under the ERTE arrangement operating in Spain. British Airways and Aer Lingus implemented restructuring programs during the year, while Iberia reduced their management ranks and reduced staffing levels outside of Spain.

IAG's Profit and Loss by Operating Company - Courtesy IAG

The Group’s operating costs were impacted by the impairment of aircraft and related assets, including the early retirement of British Airways’ Boeing 747-400 fleet and Iberia’s A340-600 fleet. The company has also reached agreements to defer 68 aircraft, which were scheduled for delivery from 2020-2022. IAG’s previously projected CAPEX for the period from 2020-2022 of €14.2 billion, has now been more than halved to under €7 billion. For 2020, CAPEX was reduced 50 percent versus projections to €1.9 billion, largely attributable to aircraft delays.

In 2020, IAG took delivery of 34 aircraft, with 19 for British Airways, eight for Iberia, three for Vueling and four for Aer Lingus. As of December 31, 2020, the Group had contracted capital expenditures of €10.5 billion for 121 aircraft commitments through 2027, including 64 Airbus A320 Family, 10 Boeing 787 Dreamliners, 18 Boeing 777s, one Airbus A330, 26 Airbus A350s and two Embraer E190s.

IAG's 2020 and Future Aircraft Deliveries - Courtesy IAG

Source: International Consolidated Airlines Group (IAG)

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