With the UK now having a somewhat clearer roadmap to unlocking travel, IAG could move to make the most of the nation’s more open summer ahead. Irish flag carrier Aer Lingus could move more aircraft to the UK, as Ireland is expected to stay relatively closed for some time yet.
IAG’s mission to drive down cash burn
Ahead of IAG’s annual results later this week, rumors have begun to surface around the group’s strategy for its Irish airline. Aer Lingus is expected to move more of its aircraft to UK airports in a bid to drive down cash burn for its IAG parent. The reasoning here is that the UK will open up its airspace and begin moving people again much sooner than Ireland will.
According to reporting in the Irish Examiner, Aer Lingus could well bring more of its resources to UK airports like Manchester ahead of the UK resuming international travel. Prime Minister Boris Johnson yesterday revealed his roadmap to unlocking the UK, which detailed a resumption of international travel on May 17th, as long as certain conditions are met.
Conversely, Ireland is expected to stay largely closed throughout the summer period. For a nation that rakes in around 6% of its GDP from tourism, that’s not good news. For IAG, that leaves a fleet of 52 aircraft sitting largely idle save for cargo during what is traditionally the busiest period of the year.
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Manchester a key focus
Late last year, it came to light that Aer Lingus had applied for and received slots at Manchester airport. These slots were to facilitate the start of ‘Aer Lingus UK,’ an offshoot of the Irish airline headquartered in the UK and operating transatlantic flights under the oneworld joint venture.
By December, it was clear what the airline had in mind. It would operate routes under a UK Air Operator Certificate to US destinations, including New York, Orlando, and Boston. Based at the airport would be three of its long-range narrowbody A321LRs plus one widebody A330.
While part of this was likely competitively motivated, looking to take IAG’s fight with Virgin Atlantic to one of its key stomping grounds, there was also a ripe opportunity. The demise of Thomas Cook had left a gaping hole in transatlantic services from MAN, to the tune of more than 200,000 seats per year.
With IAG looking to capitalize on the opportunities offered by the UK’s forthcoming opening and mitigate its cash burn in 2021, the UK could see more green planes relocating to airports like MAN ahead of the summer season.
Aer Lingus will not be allowed to fail
Aer Lingus has already received some support from its government to help it weather the crisis. Earlier this month, it secured $180 million from Ireland to support its recovery. However, it appears further talks are underway about additional help for the Irish flag carrier.
Last week, Prime Minister Leo Varadkar said unequivocally that Aer Lingus would get what it needs to survive. As reported in The Journal, he said,
“I say very clearly that Aer Lingus will not be allowed to fail. It is already receiving substantial financial support from the government both through the employment wage subsidy scheme and funding through the Ireland Strategic Investment Fund. Confidential discussions are underway involving the [ministers of finance and transport] on further support for the company so it can be there when we need it again.”
While IAG’s performance will be revealed and undoubtedly scrutinized later this week, its airlines are doing what they can to bolster liquidity. Just yesterday, British Airways revealed a liquidity increase of $3.5 billion. IAG reports its results on Friday this week.
