British Airways parent company IAG records heavy loss

Chief executive says impact of Omicron and cost of ramping up capacity caused it to report first-quarter operating loss

International Airlines Group recorded £916 million in pre-tax losses for the first three months of the year. PA

British Airways’ parent company has recorded a heavy loss for the first three months of the year as the Omicron variant of coronavirus reduced passenger numbers.

Pre-tax losses for International Airlines Group (IAG) hit £916 million, although this was an improvement of the £1.2 billion loss in the same period a year ago.

The company said it saw an improvement in business travel during the period, and the overall proportion of seats filled on flights was better than a year ago at the height of global lockdowns.

IAG chief executive Luis Gallego said the company’s losses in the first three months of the year reflect “normal seasonality, the impact of Omicron and costs associated with ramping up operations”.

Demand is “recovering strongly” and the firm expects to return to profitability during the period from April to June onwards and in 2022 as a whole, he said.

Premium leisure travel is the “strongest performing segment”, Mr Gallego said, while business travel is at its highest level since the start of the pandemic.

Flight capacity in the first three months of the year was 65 per cent of 2019 levels, up from 58 per cent between October and December.

This is expected to rise to 80 per cent between April and June, and reach 85 per cent during the following three months.

Capacity on routes across the North Atlantic will be “close to fully restored” between July and September, Mr Gallego said.

BA has cancelled thousands of flights in recent weeks due to staff shortages and sickness.

Mr Gallego said: “Globally the travel industry is facing challenges as a result of the biggest scaling up in operations in history, and British Airways is no exception.

“The welcome removal of UK’s stringent travel restrictions, combined with strong pent-up demand, have contributed to a steep ramp up in capacity.”

British Airways has reduced short-haul flights to give “confidence to the customer and stability to the programme,” he said.

The rate of staff absences at BA in previous months has been around 7 per cent, compared with 4-5 per cent normally.

Mr Gallego said the airline has enough pilots but is suffering a “big problem” recruiting people in ground handling roles.

An average of 103 days to check the references of new recruits in recent months so they could start work “didn’t help”, he said.

“That’s something around 20 per cent higher than the numbers we had before.”

He attributed the delay to many people having gaps or changes in their employment history caused by the virus crisis.

The chief executive also accused Heathrow of underestimating passenger numbers, which means there is a “a lack of resources” at the airport.

This makes it “impossible to operate the capacity that we have in our minds”, he said.