TIMES.KY

Cayman Islands, Caribbeanand International News
Saturday, Feb 04, 2023

War and oil threaten to overshadow BA owner's pandemic recovery

War and oil threaten to overshadow BA owner's pandemic recovery

British Airways-owner IAG cancelled flights to Moscow and pledged to avoid Russian airspace on Friday as the invasion of Ukraine and surging oil prices threatened its post-pandemic return to profitability.

With passenger numbers edging nearer to 2019 levels, the group which also owns Aer Lingus, Iberia and Vueling vowed to bring an end to two straight years of multi-billion-dollar losses with a return to profitability from the second quarter.

But as it published results it said the British flag carrier had suspended flights to Moscow and would not use Russian airspace, a move that can add significant costs to the industry as diverted planes fly south to avoid areas of tension in the Middle East.

Russia banned British airlines from using its airspace on Friday, a day after London barred Russian flag carrier Aeroflot. Other airlines are avoiding Russia, including Virgin Atlantic, on routes between Europe and Asia.

For BA, the diversions will currently affect around 1% of its operations as the airline is still not flying to many destinations in Asia, including China and Hong Kong.

With oil prices back above $100 a barrel, IAG (ICAG.L) Chief Executive Luis Gallego said the company was hedged against volatile crude prices for two years, with the first year around 60% hedged. He said the conflict in Ukraine could knock general customer confidence, particularly for Americans.

"The point of sale in the U.S. can be affected because the people can be concerned that there is a war in Europe," he said, adding the company had not seen any impact on bookings.

SIGNS OF RECOVERY


The renewed gloom around an industry that has battled two years of travel restrictions that left planes grounded around the world threatened to overshadow the signs of recovery at one of the biggest airline groups.

IAG said on Friday it expected passenger capacity to reach 85% of pre-pandemic levels this year, following a collapse to just 36% in 2021. And while the Omicron coronavirus variant affected bookings in January and February, it had only had a minimal impact on bookings for Easter and summer 2022.

The group reported a 2.97 billion euro ($3.33 billion) net loss in 2021, versus a 4.39 billion euro loss in 2020.

"We are confident that a strong recovery is underway," Gallego said, adding business travel had started to pick up, especially on transatlantic routes.

The group's forecast for a return to profitability assumes no further setbacks related to COVID-19 and travel restrictions or material impact from "recent geopolitical developments."

Shares in IAG are down 19% over the last year. They fell 6% on Thursday after Russia's full invasion of Ukraine forced oil prices to jump back to 2014 levels on fears of supply disruption. They opened up on Friday before sliding back 1%.

IAG, which operates 533 aircraft, has been slower than some of its peers to recover from the pandemic, due to its exposure to the slow-to-open UK market, the long-shut UK-U.S. route and smaller cargo unit.

Passenger capacity in the fourth quarter was 58% of 2019 levels, up from 43% in the third.

($1 = 0.8931 euros)

Newsletter

Related Articles

TIMES.KY
Close
0:00
0:00
Charlie Munger, calls for a ban on cryptocurrencies in the US, following China's lead
EU found a way to use frozen Russian funds
First generation unopened iPhone set to fetch more than $50,000 at auction.
WARNING GRAPHIC CONTENT - US Memphis Police murdering innocent Tyre Nichols
Almost 30% of professionals say they've tried ChatGPT at work
Interpol seeks woman who ran elaborate exam cheating scam in Singapore
What is ChatGPT?
Bill Gates is ‘very optimistic’ about the future: ‘Better to be born 20 years from now...than any time in the past’
Tesla reported record profits and record revenues for 2022
Prince Andrew and Virginia Giuffre Photo Is Fake: Ghislaine Maxwell
Opinion | Israel’s Supreme Court Claims a Veto on Democracy
Moonwalker Buzz Aldrin Gets Married On His 93rd Birthday
Who’s Threatening Israeli Democracy?
Federal Reserve Probes Goldman’s Consumer Business
China's first population drop in six decades
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
China's foreign ministry branch in Hong Kong urges British gov't to stop the biased and double standards Hong Kong report
Tesla slashes prices globally by as much as 20 percent
1.4 Million Copies Of Prince Harry's Memoir 'Spare' Sold On 1st Day In UK
After Failing To Pay Office Rent, Twitter May Sell User Names
Lisa Marie Presley, singer and daughter of Elvis, dies aged 54
FIFA president questioned by prosecutors
Britain's Sunak breaks silence and admits using private healthcare
Hype and backlash as Harry's memoir goes on sale. Unnamed royal source says prince 'kidnapped by cult of psychotherapy and Meghan'
Saudi Arabia set to overtake India as fastest-growing major economy this year 
Google and Facebook’s dominance in digital ads challenged by rapid ascent of Amazon and TikTok
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
TikTok CEO Plans to Meet European Union Regulators
UK chaos: Hong Kong emigrants duped by false prospectus
France has banned the online sale of paracetamol until February, citing ongoing supply issues
Japan reportedly to give families 1 million yen per child to move out of Tokyo
Will Canada ever become a real democracy?
Hong Kong property brokerages slash payrolls in choppy market
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Effect of EU sanctions on Moscow is ‘less than zero’ – Belgian MEP
Coinbase to Pay $100 Million in Settlement With New York Regulator
FTX assets worth $3.5bn held by Bahamas securities regulator
A Republican congressman-elect is under investigation in New York after he admitted he lied about his education and work experience.
Brazilian football legend Pele, arguably the greatest player ever, has died at the age of 82.
Hong Kong to scrap almost all its Covid rules
EU calls screening of travellers from China unjustified
US imposes Covid testing for visitors from China
Ukraine President Volodymyr Zelenskyy Addresses Joint Session of Congress - FULL SPEECH
If a country is denied the right to independence by another, it is not in a union. It is in a dictatorship.
Where is Rishi? Chancellor Jeremy Hunt's excuses about the UK's economic challenges just don't make sense
Former FTX CEO Bankman-Fried finally arrested in Bahamas after U.S. files charges
Corruption works: House Financial Services Chair Waters doesn't plan to subpoena her donor, Sam Bankman-Fried, to testify at hearing on FTX collapse
Ronaldo's new contract...
Prince William's godmother resigns honorary royal role after exposing her/their racism
British PM Rishi Sunak pledges further action on strikes to 'protect lives'
×