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Transport

British Airways owner IAG should escape compensation from Heathrow closure, bank analyst says

International Consolidated Airlines Group SA (LSE:IAG) may not see the same financial impact from last week's Heathrow fire as the £80 million hit the British Airways owner took from an IT outage in 2017.

After Heathrow was closed on Friday because of an electrical substation fire, Citi's initial thoughts were to compare the situation to the 2017 IT outage cost, which included £30 million in lost revenue.

"However, we believe much of the cost was compensation," analysts at the US bank said, whereas the fire "would appear to be outside of the airline's control, so compensation may not be payable".

However, IAG will have needed to provide food and water and possibly hotel accommodation.

It also appeared to be "one-off in nature, so we'd argue deserves a one times multiple".

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