British Airways parent company IAG hits heavy losses amid flight cancellations Business News

British Airways is cutting capacity on its summer schedule by 5% to reduce cancellations and delays as parent company IAG eyes a post-pandemic recovery from heavy losses to profits for the rest of the year.

The flag carrier struggled to cope with staff shortages at the start of this year, made worse by persistent IT problems, just as passengers returned in large numbers after the end of Covid regulations.

Shares of IAG, which also owns Iberia, Vueling and Aer Lingus, fell 8% in early trading, making it the worst performing FTSE100 stock.

However, the company said a recovery in business travel and affluent passenger travel will lead to a return to profitability from the second quarter.

Chief executive Luis Gallego said the cost of handling BA’s disruption was the main reason why first-quarter operating losses were 754 million euros – much worse than analysts’ forecast of 510 million euros.

The company lowered its group capacity forecast for the full year to around 80% of 2019 levels – from 85% – “to provide more stability for the summer,” Gallego said.

“Demand is recovering strongly, in line with our previous expectations,” he added. “Premium leisure continues to be the best performing segment and business travel is at its highest level since the start of the pandemic.”

Capacity on routes across the North Atlantic will be “almost fully restored” between July and September, Mr Gallego said.

BA has canceled thousands of flights in recent weeks due to staff shortages and illness.

Mr Gallego added: “Globally, the travel industry is facing challenges due to the biggest increase in operations in history, and British Airways is no exception. The welcome removal of strict travel restrictions from the UK, combined with strong pent-up demand, contributed to a strong increase in capacity. »

British Airways has reduced short-haul flights to give “customer confidence and program stability”, he said.

The staff absence rate at the BA in the previous months was around 7%, compared to the normal 4-5%.

Mr Gallego said the airline had enough pilots but suffered from a “big problem” in recruiting for ground handling roles.

An average of 103 days to check new hires’ references in recent months so they can start working “hasn’t helped”, he added.

“That’s something around 20% more than the numbers we had before.”

He attributed the delay to many people with gaps or changes in their work history caused by Covid-19.

The chief executive also accused Heathrow of understating passenger numbers, meaning there is a “lack of resources” at the airport.

This makes it “impossible to harness the capacity we have in our minds”, he claimed.