IAG swings to £6 billion of net loss in 2020 due to COVID-19 restrictions

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 Feb 26, 2021
  • IAG swings to £6 billion of net loss in 2020 due to COVID-19 restrictions.
  • International Consolidated Airlines is committed to slashing its cash burn.
  • The airline holding company reports £6.78 billion of revenue in 2020.

International Consolidated Airlines Group SA (LON: IAG) said on Friday that it concluded 2020 with a net loss due to the COVID-19-related restrictions that weighed on its revenue. The company also refrained from giving its guidance for 2021 on the back of the Coronavirus uncertainty.

The novel flu-like virus has so far infected more than 110 million people worldwide and caused over 2.5 million deaths.

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IAG shares, that you can learn to buy online here, slid roughly 2% in premarket trading on Friday but jumped a little under 10% on market open to trade at 199 pence per share. The stock had started the year 2021 at a much lower 150 pence per share.

IAG is committed to slashing its cash burn

The owner of prominent air carriers, including British Airways, Vueling, and Iberia, said that its net loss in 2020 stood at £6.02 billion. In the previous year, it had reported £1.50 billion of profit instead. According to FactSet, experts had forecast the company to record a narrower £5.63 billion of loss in the recently concluded year.

Pre-tax loss, as per IAG, printed at £6.79 billion in 2020 versus the year-ago figure of £1.98 billion of profit. The Anglo-Spanish multinational booked £2.66 billion of an exceptional pre-tax charge in 2020.

The London-based firm secured £2.38 billion of new capital in October. As per Goodbody analysts:

“With further losses expected this year, another rights issue can’t be ruled out in the medium term.”

IAG is currently committed to reducing its cash burn via cutting costs. In the first quarter, it said, weekly cash burn narrowed to £160.86 million versus the quarter-ago figure of £215 million.

IAG reports £6.78 billion of revenue in 2020

International Consolidated Airlines Group said that it generated £6.78 billion of revenue in 2020. In the previous year, its revenue registered at a significantly higher £22.18 billion. In comparison, FactSet Consensus for its full-year revenue stood at £7.03 billion.

The airline holding company further said on Friday that its capacity in Q1 of 2021 will remain near 20% of levels seen in 2019. According to CFO Steve Gunning, IAG will not need additional funding to survive the ongoing health emergency.

IAG performed largely downbeat in the stock market last year with an annual decline of more than 60%. At the time of writing, it has a market capitalisation of £9.76 billion.

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