International Airlines Group, owner of British Airways, Iberia and Aer Lingus, among other carriers, is planning to cut capacity to 60 percent of 2019 levels for the fourth quarter of 2020 thanks to ongoing travel restrictions, particularly in the long-haul market.
The group said that while it was encouraged by an increase in bookings in June to 30 percent of June 2019 levels following an "almost complete cessation" in April and May, the re-implementation of quarantine requirements by the U.K. and other European governments returning from specific countries has "levelled off" forward bookings across its airlines.
IAG added that it had been prepared for a delayed recovery in long-haul booking activity, impacted by ongoing restrictions for transatlantic flights to North and South America, but that it had seen a "modest increase" in long-haul bookings since mid-August.
As a result, capacity for Q3 is expected to be down 78 percent compared to last year, while Q4 capacity will decline to 60 percent of 2019 levels—much lower than IAG's original estimate of 46 percent—and overall capacity for 2021 could decline by 27 percent. The group continues to predict that passenger demand will not return to 2019 levels until at least 2023.
The group made its predictions as it released details of a previously announced fully underwritten capital increase aimed at raising more than €2.7 billion from shareholders through the sale of new shares at a discounted price. Largest shareholder Qatar Airways has already agreed to buy its pro-rata entitlement of new shares. IAG said it would use the extra cash to reduce debt and help it survive a long-term downturn in travel.
BA still is in the process of reducing its headcount by up to 13,000. By the end of August, it had cut staffing levels by 8,236 employees, mostly through voluntary redundancy, according to IAG. The carrier has reached labor agreements with pilots, engineers and customer service staff at Heathrow airport, while the Unite union will soon be balloting cabin crew on a deal. Other consultations with Heathrow ground handling services and cargo operations staff, U.K. call center employees and Gatwick-based cabin crew are ongoing.
Meanwhile, IAG said Iberia and Vueling will continue to benefit from the Spanish government's furlough scheme, which is expected to be extended into 2021. Aer Lingus has implemented salary and working hours reductions across the airline and expects 250 voluntary redundancies by the end of the year.
Originally published by BTN Europe.