British Airways owner IAG will cut capacity by 75% through May

Mar 16, 2020

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On Monday morning, International Airlines Group, the parent company of British Airways, Aer Lingus and Iberia, among others, announced that it was implementing extreme measures to minimise losses amid the ongoing coronavirus crisis.

The most drastic of measures include that the group plans to reduce capacity for April and May by at least 75% compared to the same period in 2019. The group didn’t make clear which airlines and routes would be most severely cut.

“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”, IAG CEO Willie Walsh said in a statement. “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”.

In addition to capacity cuts, IAG is also grounding surplus aircraft, though it didn’t specify which aircraft would be grounded during the period from April to May.

IAG also said that as a measure to reduce operating expenses and improve cash flow, the group is also “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”, according to a press release.

Details on specifics remain light.

As a result of the coronavirus crisis, Walsh has delayed his retirement as CEO of IAG. In January, Walsh announced that he would be stepping down from his role on the board and as CEO as of 26 March before fully retiring on 30 June. However, given the coronavirus crisis, Walsh “has agreed to delay his retirement for a short period”.

While Walsh is still at the helm of IAG, Luis Gallego, who was set to replace him, will remain in his role as Iberia CEO.

IAG airlines had already suspended operations to China, as well as reducing capacity on Asian routes. Additionally, it has cancelled all flights to, from and within Italy.

Along with the general decline in demand to travel, the recent U.S. travel restrictions for foreign nationals entering the country from most European countries have nearly halted transatlantic demand.

Related: The new European travel restrictions will hit airlines hard

Other than British Airways, IAG also owns Aer Lingus, Iberia, Vueling and LEVEL. The group had previously agreed to purchase Air Europa, a deal that was set to be completed in the second half of 2020.

The group isn’t the first to suspend large portions of its operation and fleet as a result of the ongoing coronavirus outbreak. European airlines have been forced to slash operations and offer extensive waivers as a result of the decrease in demand.

Over the weekend, the big three U.S. carriers — United, American and Delta — all announced their plans to reduce capacity and ground some of their fleets amid the spread of the pandemic.

Featured photo courtesy of British Airways.

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