Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

IAG Share Price Loses Altitude As The Airline Posts A Record £6bn Loss

By CMC Markets (Michael Hewson)Stock MarketsFeb 26, 2021 08:07
IAG Share Price Loses Altitude As The Airline Posts A Record £6bn Loss
By CMC Markets (Michael Hewson)   |  Feb 26, 2021 08:07
Saved. See Saved Items.
This article has already been saved in your Saved Items

IAG (LON:ICAG)’s share price has seen some decent gains in the past few weeks, up over 25% on optimism over an economic re-opening as the UK’s vaccine rollout gathers pace.

Airlines could certainly do with some good news with most of them operating at around 25% of capacity, and haemorrhaging cash at eye wateringly high levels, as they strive to keep a core number of their aircraft fleet serviceable, and ready to return to service, as restrictions start to get loosened.

The costs of the pandemic on British Airways owner IAG’s finances were no better illustrated when at the end of Q3 the airline revealed it had lost £5.1bn for the year to date, losing on average about £20m per day between January and September, while also shedding 10,000 jobs at BA and Aer Lingus at a cost of £250m.

As we come to the year end and the reintroduction of tighter restrictions throughout the winter months along with new travel restrictions this latest quarter hasn’t been much better. Having seen a 70% fall in passenger traffic in Q3, the numbers in Q4 saw capacity at 26.6% of that in 2019. For the whole of 2019 the airline flew 33.9% of its capacity compared to the previous year.

For Q4 the company posted an operating loss of €1.47bn, which when extrapolated out into the full year numbers, saw the airline slump to a loss, after tax and exceptional items of €6.9bn, or just over £6bn, with most of that loss coming in the form of €3bn on hedging losses on fuel, that was never delivered as the airline was unable to use it, and write-downs on the value of its fleet.

These included the early retirement of its British Airways Boeing (NYSE:BA) 747-400 fleet and Iberia Airbus Group SE (PA:AIR) A340-600’s, as well as the deferral of 68 aircraft.

For the year, passenger revenue fell 75.5% from €22.47bn to €5.5bn.

As we look ahead to the current year and with restrictions only likely to be eased sometime in Q2 21, there is still some way to go before passenger numbers return to any kind of normal, with IAG saying that capacity plans for Q1 are around 20% of 2019 levels, in essence meaning that Q1 is set to be worse than Q4.

All in all, while these numbers are undoubtedly bad, they aren’t surprising either. IAG’s biggest problem however is not a pickup in passengers on an economic re-opening. It will be able to benefit from the return of domestic passengers like its smaller peers EasyJet PLC (LON:EZJ) and Ryanair Holdings PLC (LON:RYA).

Its main problem will be getting the same levels of long-haul business travel that it had before the pandemic. This is where most big carriers make their money, and it is here that normal service may well take a little longer to return to the same levels they were in 2019.

Not surprisingly IAG hasn’t offered any guidance for 2021, citing the uncertain economic outlook, but are optimistic about a rebound due to pent up demand, however they have also called for international common testing standards and the introduction of digital health passports to encourage people back onto planes, and into the sky.

On the finances front, these have been bolstered with €3.4bn of additional funding secured in Q4 including a five year £2bn loan backed by the UK government, which has boosted its cash levels at the end of last year to €5.92bn, while its liquidity increased to €10.3bn, so it does have time on its side.

One thing seems certain, the “World’s Favourite Airline” is likely to be a much slimmed down version when we come out of the other side of the pandemic.

"DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. "

Original Post

IAG Share Price Loses Altitude As The Airline Posts A Record £6bn Loss

Related Articles

IAG Share Price Loses Altitude As The Airline Posts A Record £6bn Loss

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email