International Consolidated Airlines Group (LSE:IAG) SA, the owner of British Airways, forecast operating losses before exceptionals of around €3bn for 2021 after losses more than halved in the third quarter.
IAG added it hopes to return to profitability in 2022 following “a significant recovery” in bookings as Coronavirus (COVID-19)-travel restrictions are lifted.
Longhaul is recovering faster than shorthaul and there are also nascent signs of a recovery in business travel, the group said in its earnings release.
Reported operating losses before exceptional items narrowed to €485mln in the three months to 30 September 2021, compared with a restated loss of €1.3bn in the quarter last year.
In the first nine months, operating losses before exceptionals shrank to €2.6bn from a restated €3.2bn deficit, on revenue of €4.9bn, down from €6.5bn.
Passenger capacity rose to 43.4% of pre-pandemic 2019 levels, up from 21.9% in the second quarter.
Current passenger capacity plans for the final quarter are for 60% of 2019 capacity, which would result in full-year capacity of 37% of the levels seen in 2019 level.
Cargo reached 73.4% of 2019 levels in the three months to end-September, despite a reduction in cargo-only flights as passenger capacity increased.
The airline recorded an exceptional credit before tax €178mln in the first nine months on discontinuance of fuel and foreign exchange hedge accounting and the reversal of the impairment of certain fleet assets.
Liquidity at the end of October was €12.1bn, including an increase in cash to €8bn, IAG said.
Among the group’s airlines, Iberia and Vueling continued to be the best performers in the third quarter, with Iberia returning to profit and Vueling breaking even.
The full reopening of the transatlantic travel corridor from next week “is a pivotal moment” for the industry, IAG said.
“British Airways is serving more US destinations than any transatlantic carrier and we're delighted that we can get our customers flying again,” said IAG chief executive Luis Gallego.
"Longhaul traffic has been a significant driver of revenue, with bookings recovering faster than shorthaul as we head into the winter. Premium leisure is performing strongly at both Iberia and British Airways and there are early signs of a recovery in business travel.
"In the short term, we are focused on getting ready to operate as much capacity as we can and ensuring IAG is set up to return to profitability in 2022. Our teams are creating opportunities and implementing initiatives to transform our business and preparing it for the future so that we emerge more competitive. This includes initiatives such as our new shorthaul operation at Gatwick, Vueling's expansion at Paris-Orly, Aer Lingus' services from Manchester to the US and the Caribbean and our new maintenance model in Barcelona," Gallego added.
Commenting on IAG’s climate commitments, the CEO said it is the first airline group worldwide to commit to achieving net zero carbon emissions by 2050.