British Airways owner IAG reports record $9 billion loss, calls for digital health passes

The past year has been one of the most challenging on record for the aviation and airline industries.

Such is the case for International Airlines Group (IAG), the parent company of British Airways, Aer Lingus and Iberia, among others, which has announced a record 7.4 billion euro ($9 billion) annual loss as a result of the coronavirus pandemic-spurred downtown in travel.

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In its earnings report on Friday, IAG announced that consumer demand from March to December 2020 was down 87.2% compared to the same period in 2019.

The group attempted to soften the blow from dwindling passenger numbers by reducing operating costs. With that came pay cuts, temporary reductions and complete restructuring with British Airways and Aer Lingus. Around 13,000 British Airways staff were laid off and the airline's entire fleet of Boeing 747s was sent to the scrappers.

As well as the changes to the airline's structure, instead of issuing refunds, losses were partly mitigated by the use vouchers in an effort to keep as much cash as possible within the company.

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Thanks to widespread vaccine rollouts and the U.K. Prime Minister's roadmap out of lockdown, British Airways sees a potential return to travel. Following Monday's announcement, British Airways welcomed a surge in bookings, which was a sharp increase compared to the previous day and seven-day average.

IAG CEO Luis Gallego also confirmed that the Boeing 737 MAX is still very much on IAG's radar. The MAX is "a good aircraft" and a "good alternative in our fleet," Gallego said on the group's earnings call. BA's short-haul fleet is currently made up of only Airbus A320-family aircraft.

Related: TUI operates first commercial 737 MAX flight in Europe since 2019 grounding

Additionally, BA CEO Sean Doyle expressed the importance of the airline's World Traveller Plus (premium economy) cabins and the role the product will play moving forward. Doyle said that World Traveller Plus suits leisure travelers well, especially at a time when demand from corporate travelers who are more like to fly in Club World (business class) is lagging.

The airline conglomerate views vaccination, as well as vaccination or health passports as being the key to getting the industry back in the air. Even still, IAG only expects to fly 20% of the capacity it flew in 2019 for 2021.

"The main priority now is to navigate towards a meaningful return to service as quickly as possible as vaccinations are rolled out and stringent border restrictions and quarantine requirements are lifted," IAG said.

We're calling for international common testing standards and the introduction of digital health passes to reopen our skies," Gallego said.

In the immediate future, BA passengers can expect both long- and short-haul flights to operate from Heathrow while only long-haul operations will resume from Gatwick. By the end of February, the airline expects to have a total of 28 long-haul aircraft fitted out with its new business-class product, Club Suite.