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IAG, BA’s parent, to cut flights across the group by 75% in April and May

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IAG, the parent company of British Airways, Iberia and Aer Lingus amongst other airlines, put out a Stock Market announcement this morning.

The group is to cut capacity – in terms of miles flown – by 75% in April and May.  It is not yet clear how this will be spread across the different airlines in the group.

For reference, Finnair announced this morning that it is cutting 90% of its capacity from 1st April.  Only 20 routes will remain, primarily domestic flights.  LOT, Austrian and airbaltic have closed entirely.  Scandinavian is running a skeleton service.

There are two other points to note:

Willie Walsh is delaying his retirement as IAG Chief Executive

IAG has €9.3bn of cash, cash equivalents and undrawn loan facilities it can tap

We will update when we get a separate statement from British Airways on what it will be cutting.

Here is the full statement:

IAG’s actions to address COVID-19’s financial impact

The rapid spread of COVID-19, and associated government travel restrictions and advisories are having a significant and increasingly negative impact on the demand for global air traffic on almost all routes operated by IAG’s airlines.

To date IAG has suspended flights to China, reduced capacity on Asian routes, cancelled all flights to, from and within Italy and made various changes to our network.

The US Presidential announcement to restrict entry of foreign nationals who have been in countries in the Schengen Area, the UK and Ireland has added to the uncertainty on North Atlantic routes. In addition, many other countries have banned or are restricting inward travel including Argentina, Chile, India and Peru. Spain has also been the subject of travel advisories, for example by the UK Foreign and Commonwealth Office (FCO).

IAG is implementing further initiatives in response to this challenging market environment. Capacity, in terms of available seat kilometres, in the first quarter of 2020 is now expected to be reduced by around 7.5 per cent compared to last year. For April and May, the Group plans to reduce capacity by at least 75 per cent compared to the same period in 2019.

IAG is also taking actions to reduce operating expenses and improve cash flow. These include grounding surplus aircraft, reducing and deferring capital spending, cutting non-essential and non-cyber related IT spend, freezing recruitment and discretionary spending, implementing voluntary leave options, temporarily suspending employment contracts and reducing working hours.

Given the continued uncertainty on the potential impact and duration of COVID-19, it is still not possible to give accurate profit guidance for the full year 2020.

The Group has strong liquidity with cash, cash equivalents and interest-bearing deposits of €7.35 billion as at 12 March. In addition, undrawn general and committed aircraft backed financing facilities amount to €1.9 billion, resulting in total liquidity of €9.3 billion.

Willie Walsh, IAG’s chief executive, said: “We have seen a substantial decline in bookings across our airlines and global network over the past few weeks and we expect demand to remain weak until well into the summer. We are therefore making significant reductions to our flying schedules. We will continue to monitor demand levels and we have the flexibility to make further cuts if necessary. We are also taking actions to reduce operating expenses and improve cash flow at each of our airlines. IAG is resilient with a strong balance sheet and substantial cash liquidity.”

In light of the exceptional circumstances facing the aviation industry due to COVID-19, and in particular the developing situation in Spain, it has been decided that Luis Gallego will continue in his role as Iberia chief executive for the next few months to lead the response in Spain. In the meantime, Willie Walsh will continue to act as Group chief executive and Javier Sanchez will remain in place as Vueling chief executive.

Antonio Vázquez, IAG´s chairman, said: “As we respond to COVID-19, Willie, Luis and the board of IAG have decided that management stability across the Group should be a priority in the near term. We are grateful that Willie has agreed to delay his retirement for a short period at this challenging time.”

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Comments (123)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Tony says:
    16 Mar16 March 10:59

    I’ve just had an email from BA saying my flight to New York (9th April) is not cancelled. How will this work if Trump is not allowing Europeans into the US? Appreciate it might yet be cancelled, but if it’s not, and the US isn’t letting us in, what are the options?

    • Sean says:
      16 Mar16 March 11:06

      Presume you will need to cancel for a voucher (if its non avios booking) so they don’t need to refund cash.

    • Anna says:
      16 Mar16 March 11:08

      I have a similar message on my booking and am wondering if BA are trying to stall people claiming refund/re-routing at this time under EU261. You are not going so it’s up to you to decide how long to leave it before you cancel/change.

      • Lady London says:
        16 Mar16 March 11:22

        Of course they are. Everything’s running till it’s not.

        • meta says:
          16 Mar16 March 11:26

          Same for my flight to Tokyo. It’s a waiting game. Who will blink first? The customer, the airline or the government(s).

    • Croo says:
      16 Mar16 March 11:15

      We have also had an email from BA this morning to advise that our flight to San Diego on 3rd April is going as planned.
      How can it be; San Diego is not one of the 9 US airports remaining open to flights from the U.K.?

      • Lady London says:
        16 Mar16 March 11:27

        So who blinks first?
        Each passenger or BA?
        If I had found this year’s flight to PDX (not on the we’ll-keep-you-so-long-in-the-airport-with-so-many-others-youll definitely-catch-it-list) I would be holdng on tight

      • Rob says:
        16 Mar16 March 11:52

        Either a huge amount of booked cargo (unlikely) or they are just waiting.

        • TGLoyalty says:
          16 Mar16 March 13:19

          Trump administration decided flights be banned pretty much over night who knows what will happen in 2 or 3 weeks time.

    • stevenhp1987 says:
      16 Mar16 March 11:18

      Similar email for my upcoming Oslo trip.

      It reads like they are stalling and hoping the majority of people panic and grab the voucher. Which is good for their pockets.

      Give it more time, it’ll more than likely get cancelled and then you get a full refund.

      • Anna says:
        16 Mar16 March 11:19

        Or re-route which might be more use to some people.

        • Lady London says:
          16 Mar16 March 11:29

          It will definitely give better price protection given what must inevitably come later.

    • John Graham says:
      16 Mar16 March 11:48

      I’ve had the same message about my trip to South Africa which was supposed to start on the 21st. At this point we’ve already got FCO advice against travel so are covered by insurance if BA don’t cancel the flight so there’s no reason not to wait it out as if I take the voucher I won’t get compensation from insurance and the insurance may use it as an excuse not to cover other parts of the holiday.

    • Paul Pogba says:
      16 Mar16 March 11:51

      Would you have any luck with travel insurance given the FCO are now advising against all but essential travel? https://www.gov.uk/foreign-travel-advice/usa

    • Tony says:
      17 Mar17 March 12:04

      By way of an update – Just had an email from BA cancelling the flight and issuing a refund.

  • Andy says:
    16 Mar16 March 11:06

    I’m not really up on financial lingo, what do they mean by “cash equivalents”? Is it things like shares that can quickly be turned into cash?

    • Sean says:
      16 Mar16 March 11:09

      Not shares per say – but would normally be other assets that can easily be turned into cash – in this instance i believe it is guaranteed funding lines (like an overdraft).

    • Lady London says:
      16 Mar16 March 11:47

      It’s a reassuring phrase that the BA Treasury Department have drafted together with their Corporate Finance advisers (quite possibly an investment bank) intended to state the availabilty to BA of a range of things that are as good as cash to interested parties (the markets). This is so as to support an interim flow of money through other means (short and long term borrowing from banks and in the markets) to enable the business to continue and hopefully keep interest rates paid by BA low and share price as high as it can be. A while after that and depending when next financial Year End they will also work out what level of dividend can they sustain (dividend being very important to the markets for a company like BA) but I think they’ve got time for that a bit later.

      The overall aim is for them to look as much in control as they can given the circumstances because of all the panic about which is what keeps the markets willing to give them money that doesn’t cost them too much. So this kind of announcement is useful because it indicates this to the markets while their Treasury (particularly) and Finance people work 25*8 to put together a plan to maintain all of the above given the range of possibilities and potential events.

      • Lady London says:
        16 Mar16 March 11:56

        So no “cash equivalents” is not as good as cash but BA and their Corporate Finance advisers are seeking to reassure that what they’ve got a available is as good as.

        “Cash in hand” means cash. “Cash” weirdly, sometimes isn’t quite “cash” or not all. Real bankers on here will know a lot more about these things than me. But they’re all probably a bit busy right now.

        • Rob says:
          16 Mar16 March 12:00

          They should be as good as cash, because there are plenty of other places on the balance sheet whre the asset should go if it isn’t able to be liquidated quickly.

    • Rob says:
      16 Mar16 March 11:54

      Yes. ‘Cash equivalent’ is anything that can be turned into cash within a certain number of days, such as shares or bonds. IAG is unlikely to hold shares but may hold Government bonds as a way of putting its cash somewhere. You can’t just pop €4bn into a Santander small business account.

  • stevenhp1987 says:
    16 Mar16 March 11:25

    If our flight is cancelled, will BA offer Tier Points / Avios as they have done in the past before?

    Wondering if it’s worth upgrading my trip to Oslo as I have a POUG offer…

  • Joe says:
    16 Mar16 March 11:26

    Fake news says Secret Squirrel

    • Rob says:
      16 Mar16 March 11:51

      We knew it would be 50%-75%. BA had already pulled 20% of short-haul from next week even before today’s announcement and there are enough closed off long haul routes to get you to 50%. You said BA would close entirely.

      • Joe says:
        16 Mar16 March 12:08

        Hi Rob,

        “You said BA would close entirely.” Where did I say this?

        Where does your 50-75% come from? Wasn’t the figure reported applicable across IAG? Do you know the actual percentage reduction of BA specifically?

        • MrHandBaggageOnly says:
          16 Mar16 March 12:50

          I’m quite sure Rob has better things to do with his time, so I’ll remind you that you (or at least another ‘Joe’) posted yesterday on the SAS story;

          Joe says:
          15 March 2020 at 18:12
          BA are shutting down their fleet for a period of time. Why aren’t people already aware of this?

          Although you didn’t use the word ‘entirely’ that was the insinuation. You were asked by others for your source and couldn’t/didn’t provide one.

          On another note, many thanks to Rob and the HFP team for the continued coverage. Very valuable to so many and all given for free!

          • Joe says:
            16 Mar16 March 13:33

            Apologies but there was no insinuation.

            Lets all take a step back and follow the news/facts.

            Meanwhile if Rob believes BA are only shutting down 50-75% of their fleet, then thats fair enough – his opinion is as valid as any other.

            Nothing more needs to be said.

    • ChrisC says:
      16 Mar16 March 11:56

      Do you think you are helping posting comments like ‘fake news’ because you are NOT helping anyone.

      • Secret Squirrel says:
        16 Mar16 March 18:38

        @ChrisC:
        I agree totally with Rob’s statement on the matter. I read Joe’s comment as BA were grounding its entire fleet which was incorrect and as such is “Fake News”.

    • Secret Squirrel says:
      16 Mar16 March 18:27

      Who cares what Secret Squirrel says! 😅

  • BA Boy says:
    16 Mar16 March 11:30

    Sorry but everyone talking about BA giving more or claiming EU261 remember if you drive IAG into the ground your Avios will be worthless.

    • Jeff says:
      16 Mar16 March 11:54

      There’s also zero chance of anyone getting EU261 compensation at the moment

      • stevenhp1987 says:
        16 Mar16 March 11:56

        +1 Extraordinary Circumstances

      • Andrew says:
        16 Mar16 March 11:57

        I think the point was more claiming a cash refund under EU261 rather than a BA voucher. The more of the former which happens the weaker it makes BA. Whether that could be enough to push IAG/BA under who knows.

        • stevenhp1987 says:
          16 Mar16 March 11:59

          Those of us with BA Holidays are not exactly encouraged to get a voucher either. We’d lose a significant portion of our money as they are only giving the flight element as a voucher.

          • Stu N says:
            16 Mar16 March 12:45

            BA Holidays are emailing people to say they will get a cash refund, even if you have previously applied for a voucher. I was meant to be going to the US on Thursday and got my email overnight. I’d FAR rather have cash. You’d have to be insane to accept a voucher if someone was offering you cash.

  • Ammar says:
    16 Mar16 March 11:44

    OT – my sister is booked on a non-refunadable ticket on Emirates which is travelling to Pakistan this week (into Lahore and out of Peshawar), we booked via amex travel. At present it looks like flights are still going ahead as borders not closed to foreigners in Pakistan (yet). I presume, if emirates cancel the flight then a refund could be gained, but if she becomes unwell and cannot travel would she be eligible to submit a claim via her traverl insurance (via nationawide bank account). My question is do you think amex travel would give a refund/voucher due to the current travel situation or not unless the FCO states no travel to the country?

  • Anna says:
    16 Mar16 March 11:56

    OT but possibly quite urgent – someone posted earlier but in an older thread that they can now no longer cancel their Avios 2 4 1 booking. I have just checked the BA app and this option has also been greyed out for my booking where there is a message that the flight is going ahead. The option is still there for another flight which doesn’t have the same message. So I guess we’re really going to have no choice but to try and call BA?!

    • Lady London says:
      16 Mar16 March 12:02

      Important to get your refund or voucher claim submitted to BA if you can’t get through. This proves you weren’t a no-show which is the basis needed for you to sort all the rest out even if it’s going to take a while.

      • Anna says:
        16 Mar16 March 12:10

        But will that refund process work with Avios/2 4 1 bookings? Also if they do cancel the flight I would prefer re-routing. Are BA up to some of their old sneaky tricks here?

        • Anna says:
          16 Mar16 March 12:10

          Also are they not breaching their own Ts & Cs on cancelling Avios bookings?

        • Lady London says:
          16 Mar16 March 13:08

          I’d put that in writing stating your efforts to get through – and not being able to. Crucial they don’t get a chance to argue you were a no show.

      • Anna says:
        16 Mar16 March 12:16

        What kind of voucher would I get for this booking though? Would it be guaranteed to get 3 of us to MIA in F?

        • meta says:
          16 Mar16 March 12:28

          Same here. I just gives me the option to change the flight for another date. This means that you can no longer cancel 241 booking online! Very bad indeed!

          • meta says:
            16 Mar16 March 12:30

            Is You First less busy?

          • Anna says:
            16 Mar16 March 12:48

            I was going to be considerate and not try calling for at least a couple of weeks but BA have thrown down the gauntlet effectively. I will try You First but if I have no joy then the desk agents at MAN are only 45 minutes away…

          • meta says:
            16 Mar16 March 13:43

            @ Anna Good shout out. I might as well get to Heathrow and cancel the flight on the spot 24 hours before.

        • Stu N says:
          16 Mar16 March 12:48

          Anna, when are you flying? If it’s not in the next few days I’d just hang fire and see what happens.

          • Anna says:
            16 Mar16 March 12:51

            Stu, this was my plan but now I and thousands of other travellers risk not being able to cancel our award bookings. People currently think they can wait until T-24 before cancelling but at that point they are going to find that option isn’t now open to them and if they can’t find another way to contact BA they will be classed as a no show and lose everything.

          • BJ says:
            16 Mar16 March 13:05

            Is it within the next 14 days, or further out than that? I don’t see the posing for them to start messing around with redemptions, with or without vouchers, unless they need to hold onto the cash thst badly. Surely that’s more trouble than it is worth for them. Maybe just a glitch as Debs states but that doesn’t help as it’ll be unlikely to be fixed soon given the circumstances.

          • Stu N says:
            16 Mar16 March 13:13

            Anna – T&Cs on Avios bookings are clear and they are refundable. If you demonstrate you’ve made all reasonable efforts to cancel – screengrab your call history from your mobile, take screen grabs of BA.com including date/time, get your itemised phone bill. They log visits to BA.com anyway so BA can tell when you’ve been in MMB. Loads of ways to evidence it.

            Also, perhaps it’s not some great conspiracy. Maybe they have hit pause on online cancellations for 24-48 hours while they sort out what they are and aren’t running over the next month or so. If your flight is cancelled, you’d get a full refund. If it runs but you don’t want to or aren’t able to go you can cancel nearer the time and just forfeit your £35pp. Maybe they are stopping you from cancelling while they finalise timetables and load the cancellations for the medium term. Its possibly to protect you, and realistically to minimise complaints down the line.

            If you’re not travelling imminently then hold fire and see what happens. You’ve got much more chance of getting a sensible resolution when (i) things less frantic; (ii) BA have had a chance to increase call centre capacity and (iii) you have a Plan B you can present to them of what you’d like.

            Maybe put your energy into working through the various things you’ve got booked. Compile dates and amounts paid and which card you used. List out booking refs, contact details for providers and their standard cancellation terms. Research any waivers (e.g. a lot of hotel chains will refund you prepaid rates for certain timeframes). Take screen grabs of the T&Cs for these things. Work through your travel policy and see what would be covered and what wouldn’t. Estimate any potential losses and split them into insured and uninsured. Organise the info and come up with a plan of what you need to do and when, then when the time comes act on it in a calm manner.

            That’s my suggestion anyway for people caught up in this mess.

          • Anna says:
            16 Mar16 March 13:31

            Stu I think most people are doing all that!

          • Spursdebs says:
            17 Mar17 March 05:41

            Anna, I don’t think a lot of people are doing that. You only have to read comments here and on FT people are woefully ignorant about their own travel insurance their own bookings using 241 or even cash tickets. People don’t read any t&c they just tick that box and assume. It’s unprecedented times atm and situation changing all the time but you still see people asking the same stuff repeatedly over and over they don’t bother doing their own research they rely on strangers to tell them. I’m all for helping but get annoyed when it’s clear people are to lazy to help themselves.

        • Lady London says:
          16 Mar16 March 13:33

          No and that’s why you want a reroute. That’s likely to be the only option that you the option of price protection. Unless of course things get really really bad in which case better offers for same are about. But if that happens we’re all I the $hit.

          If you reroute you might miss out on additional gain but you’ve not actually list anything or had to pay more of something for anything. Which is what I’m hoping for the future because it will mean recovery.

          I can already hear the squeals on here and the same questions being asked when the previous same ask and answer is literally 3 posts uo again and again. But that would mean a recovery and hopefully less of this virtue signalling rubbish which is really making me quite ill.

          • Anna says:
            16 Mar16 March 14:17

            Absolutely! Having spent my entire career managing crises I can categorically state that unless you can keep a sense of humour and look on the bright side you will not survive psychologically in the long term!

          • Spursdebs says:
            17 Mar17 March 05:45

            Me too LL! I’ve got a dark sense of humour at best of times my answer to the commie flu was to book 3 reward flight for end off and beginning of next year. Just in case it gets this asthmatic I’ve told my son how to get my stash of points back no need to waste them!

      • BJ says:
        16 Mar16 March 12:57

        OT @Lady London, answer to your question yesterday is on the BA voucher extension article today but I’m sure there is much more for you to be worried about right now.

        • Lady London says:
          16 Mar16 March 13:37

          Ta will take a look BJ

          Did you see the 90 days music is back that I posted in the early hours with an @ BJ on it?

      • Lady London says:
        16 Mar16 March 13:14

        Ditto rerouting if you can’t get through. Document and screenshot your efforts made to contact them with an excess of time before you had to cancel if you were going to. Dont let them say you did not allow well more than enough time on at least 3 occadions to get through to them allowing for the circumstances. Send a contact form or email if there is no clear path and keep a record.

        • Stu N says:
          16 Mar16 March 15:57

          Just done some quick checks on my redemption bookings to give some data:
          – I have a redemption intra-EU in May that I can cancel online with standard £35 charge;
          – I have a redemption to the US in November that says I need to call to cancel; and
          – I successfully cancelled a US domestic flight yesterday and the Avios were redeposited no problem.

          Seriously, I think you will be fine in due course and the idea of going to the airport in person if you’re not flying for a few weeks is a complete over-reaction.

          • Anna says:
            16 Mar16 March 16:05

            You’re jumping to conclusions yet again Stu, my point was that if it gets close to the travel date and I haven’t managed to cancel the flight I would go to the airport and ask BA for assistance before it was treated as a “no show” and I lost everything. Don’t read things that aren’t actually in people posts!

          • Stu N says:
            16 Mar16 March 16:59

            Anna – sorry if I’ve misinterpreted your comment but your 1248 reads to me that you were going to phone YouFirst imminently.

            Another theory – did you book the original flight over the phone or have you amended it since? If you’ve done either of those, you won’t normally be able to change or cancel online.

  • Doug says:
    16 Mar16 March 12:33

    So I received an email telling that I can get a voucher for my avios Easter booking, not very detailed. Has anyone actually done this? I prefer having my £35 * 2 back please BA 🙂 Now I wonder what to do for Easter, guess I will join the traffic at Stonehenge on the way to Cornwall?

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