IAG Takes Actions to Reduce the Financial Impact of COVID-19 Across Group Airlines
The International Consolidated Airlines Group (IAG) announced on Monday that they are taking actions to reduce the financial impact on the company due to diminishing demand related to the global COVID-19 pandemic.
Today (March 16, 2019), the International Consolidated Airlines Group (IAG) announced further actions to reduce the financial impact on the Group’s airlines due to reduced demand related to the global COVID-19 pandemic. The company has previously suspended flights to China, reduced capacity on Asian routes and cancelled all flights to/from and within Italy. Uncertainty regarding North Atlantic routes have been further exacerbated by US travel restrictions from the Schengen Area countries, the UK and Ireland. Inbound travel has also been restricted to Argentina, Chile, India and Peru and other countries such are Spain ere now subject to travel advisories by organizations such as the UK Foreign and Commonwealth Office (FCO). In Monday’s announcement, IAG’s CEO, Willie Walsh said,
“We have seen a substantial decline in bookings across our airlines and global network over the past few weeks and we expect demand to remain weak well into the summer. We are therefore making significant reductions to our flying schedules. We will continue to monitor demand levels and we have the ability to make further cuts if necessary. We are also taking actions to reduce operating expenses and improve cash flow at each of our airlines. IAG is resilient with a strong balance sheet and substantial cash liquidity.”
The company is also taking further measures including the reduction of first quarter capacity by 7.5% and in April and May by 75% year-over-year. IAG is also grounding surplus aircraft, reducing and deferring capital expenditures, cutting non-essential IT spend, freezing hiring and discretionary spending, offering voluntary leave, reducing work hours and suspending employment contracts. As of March 12, 2020, IAG retains a strong liquidity position with €7.35 billion in cash and equivalents as well as undrawn aircraft backed credit facilities of €1.9 billion, for total liquidity of €9.3 billion.
IAG has also decided to delay previously announced executive level changes as the Group navigates the unprecedented COVID-19 crisis. Luis Gallego will remain Iberia’s CEO for the next few months, Javier Sanchez will remain in place as Vueling’s CEO, and Group CEO Willie Walsh will delay retirement and remain in place, thereby providing management stability across the company. Further commenting on today’s announcement, IAG’s Chairman, Antonio Vázquez added,
“As we respond to COVID-19, Willie, Luis and the board of IAG have decided that management stability across the Group should be a priority in the near term. We are grateful that Willie has agreed to delay his retirement for a short period at this challenging time.”
The International Consolidated Airlines Group (IAG) is the parent company of Aer Lingus, British Airways, Iberia, Level and Vueling. The company is also in the process of closing a deal for the acquisition of Air Europa.
Editor's Note: We stand by the entire IAG team and all airlines during this difficult period as the entire world fights to limit the transmission of, and ultimately recover from, the global COVID-19 pandemic. Once it has been defeated, we look forward to the emergence of an even stronger and more robust global commercial airline industry.