IAG, the parent company of British Airways, published its half-year financial results today.
You can see the official statement here.
I am not going to run through it here because the numbers are as dreadful as you can imagine, with virtually zero passengers or revenue over the last three months. For comparison:
Q2 passenger revenue in 2019: €6.0 billion
Q2 passenger revenue in 2020: €198 million
Cargo revenue is up 31% to €369 million
What is more interesting is the accompanying commentary about where the airline goes now. Here are the highlights from the full City presentation which you can find here.
The numbers below refer to the entire IAG group and not just British Airways, unless specifically stated.
Passenger volumes will not recover to 2019 levels until 2023
The rumoured €2.75 billion rights issue (ie issue of new shares) is going ahead. Qatar Airways has agreed to take up its full 25.1% allocation.
IAG believes that, following its cost cutting measures, it will break even in Quarter 4 (ie between October and December). This is on an operating cash flow basis which, given the current cash crisis in the business, is more important than an ‘accounting’ profit. It presumably does not account for ongoing fuel hedging losses, however (see next point).
IAG lost an astonishing €1.3 billion in the last 6 months due to its failed fuel hedging strategy. This is NOT an accounting loss, it is a real ‘cash out of the door’ loss. (In simple terms, BA agreed in advance to pay a fixed price for a huge amount of jet fuel. Because the price of jet fuel fell sharply after BA made the deal, the seller was entitled to the full profit it would have made on the contract even though the fuel was never delivered. This deal works in both directions and, had jet fuel prices gone up by the same amount, BA would have received €1.3 billion.)
The £183 million fine for the 2018 BA data breach has been reduced to an estimated £20 million
Net debt at IAG level was €10.5 billion at the end of June
68 of the 143 aircraft expected to be delivered between 2020 and 2022 have been cancelled or deferred
A further 20 leased aircraft will be handed back during 2020
The cash cost of running the business is now down to €200 million per week – losses are lower than this, because revenue is now starting to come back
Capex has been reduced by €7 billion, of which €6 billion is from aircraft deferrals. Slightly worryingly, IT spending has been cut sharply.
The ‘75% bonus when you buy Avios’ offer in June gets a special mention under ‘management actions’ for raising cash!
IAG expects to be flying 25% of its expected Quarter 3 schedule and 50% of its expected Quarter 4 schedule – this is measured in seat miles flown, so in terms of aircraft movements it will be a far higher percentage given the focus on short haul
The BA London City to New York JFK service has been permanently scrapped – this is described as “exiting A318 fleet” in the presentation
The Air Europa acquisition is still progressing
How to earn Avios from UK credit cards (June 2022)
As a reminder, there are various ways of earning Avios points from UK credit cards. Many cards also have generous sign-up bonuses!
In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards.
Until 18th July 2022 there is an astonishing special offer on these cards. You get 50,000 Avios on the Avios Plus Mastercard and 10,000 Avios on the free Avios Mastercard. You can apply here. We strongly recommend getting the Avios Plus card whilst this offer is running.
You qualify for the bonus on these cards even if you have a British Airways American Express card:
There are two official British Airways American Express cards with attractive sign-up bonuses:
You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points.
SPECIAL OFFER: The sign-up bonus on Amex Gold is increased from 20,000 Membership Rewards points to 30,000 Membership Rewards points until 19th July 2022. This card is free for the first year.
Run your own business?
We recommend Capital On Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, along with a sign-up bonus worth 10,000 Avios.
You should also consider the British Airways Accelerating Business credit card. This is open to sole traders as well as limited companies and has a 30,000 Avios sign-up bonus.
There are also generous bonuses on the two American Express Business cards, with the points converting at 1:1 into Avios. These cards are open to sole traders as well as limited companies.
Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.
(Want to earn more Avios? Click here to visit our home page for our latest articles on earning and spending your Avios points and click here to see how to earn more Avios this month from offers and promotions.)