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

Feb 26, 2021

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

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.

Sign up to receive the daily TPG newsletter for more aviation and industry news!

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.

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.

(Image courtesy of IAG)

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.

Featured image by Jaime Reina/Getty Images

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points


CARD HIGHLIGHTS: 3X points on dining and 2x points on travel, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®.
  • Enjoy benefits such as a $50 annual Ultimate Rewards Hotel Credit, 5x on travel purchased through Chase Ultimate Rewards®, 3x on dining and 2x on all other travel purchases, plus more.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
Regular APR
16.24% - 23.24% Variable
Annual Fee
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.