The International Airlines Group is only planning to operate 30% of its pre-COVID flight schedule in Q4 of 2020. The timetable reduction results from decreasing bookings prompted by the second COVID-19 wave currently spreading across Europe. This has prompted governments to reinstate travel restrictions.
While all airlines have been affected by the global COVID-19 pandemic, the effects have varied between regions and airlines. For example, while China’s aviation industry has mostly recovered, US carriers struggle from a prolonged first wave. Things were starting to look up for European airlines at the end of the summer. However, it now looks as though this isn’t the case.
Revenue down, capacity cut
IAG today revealed its preliminary Q3 results. These show that across the group’s airline portfolio, revenue has fallen. This time last year, revenue for the quarter stood at €7.3 billion ($8.6 billion). However, this year the figures have taken an 83% tumble, standing at just €1.2 billion ($1.4 billion).
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A significant drop in passenger numbers would’ve largely prompted the revenue fall. While many airlines completely grounded flights, the major IAG carriers, Aer Lingus, British Airways, and Iberia, for example, all kept aircraft in the air.
IAG reports its passenger traffic as revenue passenger kilometers. This effectively means the number of kilometers flown by paying passengers as opposed to total passenger numbers. This dropped by 88%. Meanwhile, the airline’s capacity, measured in available seat kilometers, fell by 78.6%.
Expected capacity decreased
It doesn’t seem as though things will get better quickly. Indeed, today the airline group revealed that its Q4 2020 traffic would not exceed 30% of what it was operating this time last year. This had initially been planned to be around 54%. However, on September 10th, it was dropped to 40%.
In total, during the third quarter, the airline group will have flown around 22% of its pre-COVID flight schedule. This is despite British Airways upping its weekly services to roughly 1,360 weekly flights serving 138 destinations. This accounts for 25-30% of British Airways’ typical schedule.
The airline group commented,
“Recent overall bookings have not developed as previously expected due to additional measures implemented by many European governments in response to a second wave of COVID-19 infections, including an increase in local lockdowns and extension of quarantine requirements to travellers from an increasing number of countries.”
Liquidity remains strong
Despite the above, IAG’s liquidity remains in a strong position. Indeed, IAG, comprised of Aer Lingus, British Airways, Iberia, LEVEL, and Vueling, has a combined €6.6 billion liquidity. This equates to $7.8 billion. Of this, €5.0 billion ($5.9 billion) are cash, cash equivalents, or interest-bearing deposits. The remaining €1.6 billion ($1.9 billion) comes from undrawn and committed general and aircraft facilities.
IAG’s full Q3 results will be revealed on October 30th, 2020.
What do you make of IAG’s preliminary Q3 results? Let us know what you think and why in the comments!
