By Dhirendra Tripathi
Investing.com – Stock of British Airways owner, IAG (LON:ICAG), traded 3.61% higher in London trading Friday after the group forecast a return to profitability by the end of the next quarter.
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 has had a minimal impact on bookings for Easter and summer 2022, it said. Passenger capacity in the fourth quarter was 58% of 2019 levels.
"We are confident that a strong recovery is underway," CEO Luis Gallego said in a statement, adding business travel has 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.”
IAG’s commentary comes at a time when the airline industry again faces an uncertain climate, particularly in Europe, where geopolitical risks have multiplied in the wake of Russia’s invasion of Ukraine.
U.K. flights to and over Russia have been banned by the country's civil aviation authority in retaliation for a ban on Aeroflot in U.K. airspace.
The airline group has earmarked 3.9 billion euros in capital expenditure, reflecting the need to rebuild capacity towards pre-pandemic levels and certain pre-delivery payments deferred from previous years.
IAG’s 2021 net loss more than halved to 2.93 billion euros ($3.72 billion) from 6.93 billion euros in 2020. Total revenue in the year rose 8.3% to 8.45 billion euros.