International Airlines Group (IAG), owner of British Airways or Iberia, among other airlines, fails to take off in the new year and it keeps the bad prospects for your business. After a 2020 with massive losses, operating losses only of the fourth quarter would amount to 1,300 million euros, according to estimate Bank of America (BofA), the third wave of coronavirus infections prevents you from seeing any light. The airline holding company is once again facing minimal travel figures due to the restrictions imposed.
In 2019, the company earned 1,715 million euros, an already lower profit to previous years, but now the figure turns negative. This Friday it presents annual results, with bad expectations and with a special focus on the evolution of the business in the last quarter. BofA foresees that in the last months of the year, the airline holding company will entered 1,100 million euros and that operating losses are 1,300 million. IAG plans to present its accounts next Friday, February 26.
The data will worsen in the annual calculation, according to the analysts of the US bank. As of September, IAG had already lost 5.567 million. The result after tax before exceptional items was also negative at 3,176 million euros, compared to a profit of 1,814 million euros. The evolution of the business in recent months has not been better and according to the estimation of analysts, the losses in the total calculation of the year would rise to 6,216 million euros.
These historical ‘red numbers’ for IAG are due to the collapse of the revenue after falling demand due to restrictions on mobility to contain contagions, a trend that equally weighs on other companies in the sector. But, what is more worrying is that the low activity continues and decrease recovery in the first trimester. Visits to European airlines have not changed, with a year-on-year drop of 69% and only Air France, Luſthansa and Turkish airlines show slight improvement.
Despite the fact that the situation has not improved in the first months of the year and it is expected that this quarter the closing of the business will also be negative, vaccines bring some hope to the sector and, specifically to IAG. BofA highlights “a realistic path to complete inoculation of the entire population aged 65 years and over in June, which supports recovery in summerIn addition, they also point out as “encouraging” the possibility of having a Covid passport.
Meanwhile, IAG is looking for debt opportunities to improve its finances, although the group’s net debt had already risen from 7,571 million euros at the end of September 2019 to 11,096 million in September 2020. In September of last year, the company already carried out a capital increase amounting to 2,741 million (which represented a 60% dilution for shareholders who did not attend it). Despite the bad year, IAG kept the idea of buying Air Europa, which it eventually acquired for 500 million, not 1,000.
The IAG situation does not go unnoticed by the market and since last March, when the pandemic began, its price has fallen by about 38%. Furthermore, the uncertainty has attracted bearish hedge funds. At present, according to the CNMV records, only Citadel it is short and holds 0.81% of its capital. However, the figure has increased in recent weeks, it debuted its positions on February 4 with 0.57% of the capital.