Aer Lingus owner calls for Covid health passes after record €7.4bn loss

Aer Lingus Owner Calls For Covid Health Passes After Record €7.4Bn Loss Aer Lingus Owner Calls For Covid Health Passes After Record €7.4Bn Loss
The group, which also owns British Airways, Iberia and Vueling, has been trying to boost its finances as the crisis drags on. Photo: Paul Faith/AFP via Getty
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By Sarah Young

Aer Lingus owner IAG is counting on digital health passes to help spur a travel recovery this summer, after the pandemic pushed it to a record €7.4 billion loss last year, when it ran just a third of normal flights.

Tighter travel restrictions brought in by countries over the last two months have threatened to ruin Europe's critical summer season and leave some airlines in need of another round of funding support, analysts warn.

But after taking on new loans, IAG said it had €10.3 billion of liquidity and was well set to ride out the crisis.

“We've got very strong liquidity going into 2021 ... so no, we will not need additional funding,” finance chief Steve Gunning told reporters on a call.

European airlines hope travel restrictions will soon be eased to allow them to make money again. Britain on Monday laid out plans for travel markets to possibly reopen from mid-May, prompting a flood of bookings.


IAG chief executive Luis Gallego said if the UK plans went ahead, it would be a “positive summer”, but digital health passes were needed to unlock the market.

“Health passes are going to be the key to restart the aviation and the travel,” said Gallego, who is six months into the job, calling for a digital system that could include test results and proof of vaccination.

Several countries are considering health passports to help revive travel, but are worried about risks to civil liberties. However, Britain's Heathrow airport warned this week that dealing with a big rise in passengers would not be possible with current paper-based checks.

IAG's operating loss before exceptional items, its preferred measure, came in at €4.37 billion, slightly better than analysts' consensus forecast for a €4.45 billion.

Shares in IAG were up 1 per cent at 188 pence in early trading in London. They have jumped 13 per cent in the last five days, after Britain's announcement on a travel restart, but over the last 12 months have lost half their value.

For January-March, IAG said it expected to fly about 20 per cent of 2019's capacity, down from the previous quarter's 27 per cent.

IAG, which also owns British Airways, Iberia and Vueling, said it could not give profit guidance for 2021, and asked how many flights it might run this year, Gallego said: “To be honest nobody knows what's going to happen.”

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The group has been trying to boost its finances as the crisis drags on. Most recently, BA secured an extra £2.45 billion (€2.81 billion) through a UK government-backed loan and from deferring pension contributions.

Last October, IAG secured shareholder backing for a €2.74 billion capital hike, adding to savings made from over 13,000 planned job cuts.

Despite the hefty losses, IAG has stuck to its plan to buy Spain's Air Europa, announcing in January the price tag had halved to €500 million, with payment deferred for six years.

IAG's annual loss compared with Air France-KLM's annual net loss of €7.1 billion. That company has so far received €10.4 billion in loans and guarantees from France and the Netherlands and is negotiating a state-backed recapitalisation.

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