Losses at Aer Lingus parent more than halve as travel resumes

Losses at Aer Lingus parent International Airlines Group (IAG) more than halved in the first nine months of 2021 as international travel began to resume following the lifting of many Covid-19 public health measures.

In its results for the period ending September 30th, 2021, IAG reported an operating loss of €2.5 billion, which was down from €6 billion the year before. Its losses after tax were down 53 per cent from €5.6 billion to €2.6 billion.

IAG said capacity at Aer Lingus in the first quarter of the year “continued to be driven by cargo needs, with flights operating regularly to New York, JFK, Chicago and Boston with very low passenger load factors”.

In the second quarter, “capacity continued to be severely limited by the stringent restrictions put in place by the Irish Government, with passenger load factors averaging only 20 per cent”.

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Aer Lingus “expanded operations” in quarter three “following the Irish Government’s decision to ease travel restrictions for non-essential travel on July 19th”.

Domestic capacity also increased for the airline following the transfer of a number of routes from Stobart Air following its liquidation.

IAG said it continued to take action to preserve cash and boost liquidity. It drew debt facilities agreed in 2020 during the nine-month period, which included €75 million for Aer Lingus from the Ireland Strategic Investment Fund.

IAG, which also owns British Airways, Iberia, Level and Vueling, reported that overall passenger revenue was down 35 per cent from €4.8 billion to €3.1 billion.

Total revenue at IAG was down almost a quarter from €6.6 billion to €4.9 billion. The group noted that the impact of Covid-19 in 2020 was mainly limited to the period from March onwards.

Staff costs

Employee costs for the nine months decreased by €519 million compared with 2020, mainly linked to the restructuring programmes implemented in 2020.

The group continued to receive assistance from temporary furlough and equivalent temporary cost reduction schemes, which in the nine months amounted to €481 million, compared with €414 million in the same period in 2020.

Current passenger capacity plans for quarter four are for about 60 per cent of 2019 capacity.

The group reported cash operating costs for quarter three of €260 million per week, while it said there was strong liquidity of €10.6 billion at the end of quarter three, up from €8.1 billion at the end of last year.

This comprised cash of €7.6 billion and committed and undrawn general and aircraft facilities of €3 billion.

IAG chief executive officer Luis Gallego said: "In the short term, we are focused on getting ready to operate as much capacity as we can and ensuring IAG is set up to return to profitability in 2022."

At current fuel prices and exchange rates, IAG expects its 2021 operating loss before exceptional items to be about €3 billion.

Fourth-quarter capacity, measured in “available seat kilometres”, is expected to be about 60 per cent of 2019, resulting in 2021 capacity of 37 per cent of the 2019 level.