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  • Joe Breitfeller

IAG Reports Third Quarter Net Loss of €574 Million on €2.7 Billion in Revenue

IAG has reported a third quarter 2021 operating loss of €452 million, an operating loss before exceptional items of €485 million and a net loss of €574 million. The Group’s Q3 revenue increased year-over-year to €2.7 billion, compared to €1.2 billion in Q3 2020.

IAG Reports Third Quarter and Nine Month 2021 Financial Results - Image Courtesy of British Airways

On Friday (November 5, 2021), the International Airlines Group (IAG) reported their financial results for the third quarter and nine month period ending September 30, 2021. The Group reported a 9M net loss of €2.62 billion or (€0.528) per share on a 24 percent year-over-year decline in revenue to €4.92 billion. For the third quarter 2021, IAG reported an operating loss of €452 million, an operating loss before exceptional items of €485 million and a net loss of €574 million, on a revenue increase to €2.7 billion compared to €1.2 billion during Q3 2020.

At September 30, 2021, the Group’s liquidity totaled €10.6 billion, up from €8.1 billion at December 31, 2020, including €7.6 billion in cash and €3.0 billion in undrawn general and aircraft credit facilities. In July, British Airways concluded sustainability-linked EETC financing of $785 million for seven fleet deliveries for 2021 and 2022, with $685 million remaining undrawn. On November 1st, 2021, British Airways also received a £1.0 billion (€1.2 billion) committed five-year credit facility, which is partially guaranteed by UK Export Finance and remains undrawn. The additional financing has resulted in total pro-forma liquidity of €12.1 billion, including a cash increase to €8.0 billion.

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

“I would like to thank our people, who have played such a central role in all that we have achieved in the face of the most challenging time for the industry. There’s a significant recovery underway and our teams across the Group are working hard to capture every opportunity. We continue to capitalise on surges in bookings when travel restrictions are lifted. All our airlines have shown improvements with the Group’s operating loss more than halved compared to previous quarters. In Q3, our operating cash flow was positive for the first time since the start of the pandemic and our liquidity is higher than ever, reaching €12.1 billion on a pro forma basis at the end of October.

“The full reopening of the transatlantic travel corridor from Monday is a pivotal moment for our industry. British Airways is serving more US destinations than any transatlantic carrier and we’re delighted that we can get our customers flying again. Long haul traffic has been a significant driver of revenue, with bookings recovering faster than short haul as we head into the winter. Premium leisure is performing strongly at both Iberia and British Airways and there are early signs of a recovery in business travel. Iberia and Vueling continued to be the best performers within the Group in the third quarter. Iberia returned to profitability while Vueling reached breakeven at the operating level. Both seized opportunities to strengthen their positions on routes to Latin America and the Spanish domestic market.

“In the short term, we are focused on getting ready to operate as much capacity as we can and ensuring IAG is set up to return to profitability in 2022. Our teams are creating opportunities and implementing initiatives to transform our business and preparing it for the future so that we emerge more competitive. This includes initiatives such as our new short haul operation at Gatwick, Vueling’s expansion at Paris-Orly, Aer Lingus’ services from Manchester to the US and the Caribbean and our new maintenance model in Barcelona.

“We also remain resolute in our climate commitments. We’re transforming our business and driving change to create a truly sustainable airline industry. IAG has led the way by being the first airline group worldwide to commit to achieving net zero carbon emissions by 2050 and we welcome IATA’s recent announcement that the industry will join us in meeting this goal.”

Based on current fuel prices and exchange rates, IAG is expecting a fourth quarter operating loss before exceptional items of approximately €3.0 billion. Fourth Quarter 2021 capacity measures in available seat kilometers (ASKs), is expected to reach 60 percent of Q4 2019 levels, resulting in an overall 2021 capacity of 37 percent, when compared to FY 2019 levels.

IAG's Consolidated Income Statement for the Third Quarter and Nine Month Period Ending September 30, 2021 - Courtesy IAG

In trading Friday afternoon, shares in the International Consolidates Airlines Group SA (LSE: IAG) were up 3.73% to GBp 176.12 (2:29 PM GMT).

Source: IAG