IAG swings to an operating loss of £473 million in the first quarter

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on May 10, 2020
  • International Consolidated Airlines Group swings to an operating loss £473 million in Q1.
  • IAG boasts £8.84 billion cash, £5.66 billion cash equivalents, & £3.18 billion undrawn facilities.
  • The company matches analysts' estimate for revenue in Q1 but falls short on the earnings front.

International Consolidated Airlines Group (LON: IAG) released its quarterly financial results on Thursday that showed an operating loss (pre-exceptional) of £473 million as compared to £119 million profit in the same quarter last year. The company attributed its downbeat performance to Coronavirus restrictions that brought the global travel and tourism industry to a near halt in March.

IAG reported a 33.5% decline in ASKs (available seat kilometres) in March while the overall traffic tanked 50%. The airlines group also saw a massive £1.15 billion loss attributed to fuel and foreign currency in the first quarter. The company boasted £8.84 billion in cash and £5.66 billion in cash equivalents, as of April 30th. IAG also has £3.18 billion undrawn facilities.

IAG to defer 68 aircraft deliveries

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In its earnings report, the airline holding company also said that it has slashed its cash operating costs from £389 million weekly to £177 million weekly. As per CEO William Walsh, IAG also made adjustments to its fleet deliveries and capital expenditures. The company is expected to defer 68 aircraft deliveries in three years.

Other noticeable figures in International Consolidated Airlines Group’s financial report include £4.07 billion in quarterly revenue and 76 pence of earnings per share. The company’s revenue was reported in line with the experts’ forecast but its EPS (earnings per share) was around 20% lower than the estimates.

CEO Walsh was originally scheduled to retire in March. In its announcement on Thursday, however, the company said that Walsh will continue to lead it amidst the Coronavirus pandemic until September. Luis Gallego will take over the position of IAG’s CEO following Walsh’s departure.

IAG to layoff 12,000 workers at British Airways

In a bid to further shore up finances, IAG also announced last week that it plans on laying off a quarter of the British Airways’ total workforce (12,000 employees). According to the CEO:

“Group-wide restructuring is essential in order to get through the crisis and preserve an adequate level of liquidity. We intend to come out of the crisis as a stronger group.”

At 190 GBX per share, International Consolidated Airlines Group is currently around 70% down year to date in the stock market. Its performance in 2019 was also reported only marginally upbeat with an annual gain of roughly 3%.

At the time of writing, IAG is valued at £3.78 billion and has a price to earnings ratio of 2.58.

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