COVID-19: BA owner lists four priorities for travel restart as losses ease

May 07, 2021

The parent firm of British Airways (BA) has demanded government action in "four key areas" to help facilitate the restart of foreign travel while revealing a reduction in first quarter losses.

International Airlines Group (IAG) argued that the authorities globally needed to assist airlines begin the process of economic recovery from the COVID-19 crisis through measures to encourage ease of travel.

Speaking hours before the UK was due to outline which countries it would allow its citizens to fly to in an easing of restrictions expected from 17 May, IAG said travel corridors without restrictions should be allowed between countries with successful vaccination rollouts.

It singled out the UK and US as examples.

The company's list also called for:

• 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.

The industry has been keen to make its voice heard in recent weeks in anticipation of the publication of the UK government's so-called 'green list' - a rules-based traffic light system governing which nations holidaymakers can venture to.

Airlines and travel firms are praying key holiday markets can be opened up following a horrific 16 months for the sector globally as the pandemic wreaked havoc on demand.

The green list is tipped to be small initially - possibly totalling no more than six nations as COVID cases remain high in many holiday hotspots.

Andrew Flintham, the managing director of travel company Tui, told Sky News the company was expecting most of the "big" travel destinations for UK travellers to be placed on the amber travel list.

This means that people will have to isolate at home for five days when they return to the UK, and take two COVID tests.

IAG was cautious in its capacity prediction for the current second quarter of the year - seeing just 25% of its fleet operating but hoped for a recovery in July as the peak summer season started.

Over the past year, IAG has cut 13,000 jobs at BA alone, axed inefficient aircraft such as 747 jumbo jets and raised money at pace to bolster cash reserves.

The group, which also includes Iberia and Aer Lingus in its stable of carriers, reported losses after tax of €1.1bn (£954m) for the first three months of the year.

It represented an improvement on the €1.7bn loss figure reported for the same period last year as the sector grappled the first few months of disruption.

The first quarter of 2021 achieved passenger revenue of just €459m (£398m) for IAG - down from almost €4bn (£3.5bn) over the same three months of 2020 as capacity was cut to a fifth of that flown in 2019.

IAG said total revenue of €968m (£840m) was boosted by cargo and it was still unable to provide guidance on its full year given the continuing uncertainty.

IAG boss Luis Gallego told investors: "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."

He said of the airline's list of demands: "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."

Shares, up 30% in the year to date after a bloodbath during 2020, made tentative gains in early Friday deals.

Jack Winchester, analyst at Third Bridge, said of the company's update: "The two big questions for IAG are when will the world start flying again, and how soon can business travel recover.

"Consensus estimates predict IAG's revenues won't reach 2019 levels again until 2026 and business travel is likely to be depressed for even longer."

He added: "In the shorter term, a lot will hinge on what the UK government deems as appropriate 'traffic light' designations in key markets such as Spain."

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