The owner of British Airways has nosedived to a €6.2bn (£5.6bn, $7.2bn) pre-tax loss for the first nine months of the year, compared with a profit of €2.3bn a year ago, as the pandemic continues to create turbulence in the travel industry.
International Consolidated Airlines Group (IAG.L) has so far slashed 10,000 jobs across the company in a cost-cutting exercise, with most of the losses occurring across British Airways and Aer Lingus. The group also owns Iberia and Vueling.
The FTSE 100 company said the results were “significantly impacted by the outbreak of COVID-19, which has had a material impact on the global airline and travel sectors, particularly from late February 2020 onwards and with no immediate signs of recovery.”
The group added that passenger capacity in its third quarter was 78.6% from last year, and 64.3% lower for the nine month period compared to 2019.
It expects capacity in the fourth quarter to be no more than 30% compared with 2019 and forecasted that it will take until at least 2023 for passenger demand to recover to 2019 levels.
“Overhedging” fuel and foreign currency, as well as locking in prices for higher volumes, cost the company €1.6bn.
Watch: Major airlines face up to likely winter blues
READ MORE: British Airways chief quits in major shakeup
It came as Luis Gallego, who took the helm as chief executive in September, called on the government to adopt pre-departure testing, and affordable tests with the option of post flight testing to get travellers released from quarantine.
“This would open routes, stimulate economies and get people travelling with confidence. When we open routes, there is pent up demand for travel,” he said.
He added: “These results demonstrate the negative impact of COVID 19 on our business but they're exacerbated by constantly changing government restrictions. This creates uncertainty for customers and makes it harder to plan our business effectively.”
The International Air Transport Association (IATA) estimates that the global industry will lose $84.3bn this year, with demand down 66% on 2019.
Last week, William Ryder, equity analyst at Hargreaves Lansdown, said IAG “could be in real danger” as infections rise and restrictions increase.
He said: “It looked for a moment like the worst may be behind the airlines. But the virus has returned with a vengeance and governments have started to impose increasingly draconian measures to fight it.
“Just how turbulent the future will be for IAG may depend on how many more waves of coronavirus we face. If this is it, and some combination of a vaccine, track and trace and partial herd immunity can prevent a third wave next year, IAG should come through, albeit badly scarred.”
IAG shares have lost 63% of their value since the start of the year. Shares were up 2.2% in early trade.