Aer Lingus and BA owner IAG 'won't be bailed out like Lufthansa' over Covid-19

It comes as the shares of IAG and Ryanair have clawed back part of their substantial losses amid the Covid-19 fallout in the last two weeks, as investors assess the airlines with the best hopes to survive the industry’s worst crisis, despite their grounded fleets burning through cash.

IAG is the international conglomerate put together by Willie Walsh in the last 10 years. It includes Britain’s BA, Spain’s Iberia and Vueling, as well as Aer Lingus after the Irish Government under the then Transport Minister Paschal Donohoe sold the State’s remaining 25% stake in Aer Lingus, in 2016.

The unprecedented turbulence caused by the Covid-19 crisis since March has already meant that Air France-KLM has tapped aid from the French and Dutch governments to keep flying.

In the most dramatic illustration of the crisis, Lufthansa last week agreed to tap €9bn in aid in return for Germany taking back part of the shares into state-ownership.

However, Mr Furlong at broker Davy said that a group of airlines, including Lufthansa and Air France-KLM, had relatively less liquidity going into the crisis compared with IAG and Ryanair.

In the case of Ryanair, the airline now has a total of over €4bn in liquidity at hand, including its huge cash reserves, as well as access to facilities such as the British government’s Covid-19 emergency credit scheme, which it and other airlines, including EasyJet, have availed of. The airlines have also announced significant plans to cut jobs.

“We do not believe that the type of assistance required by Lufthansa is going to happen to IAG if it takes the necessary restructuring steps it has to do,” Mr Furlong said. Meantime, the outlook for airlines remains clouded.

The industry forecasts that revenues are not unlikely to return to 2019 levels before 2023, Mr Furlong said.

IAG shares are down 40% in the past year, while Ryanair shares which had a torrid 2018, are up 8%.