British Airways is reducing capacity on its summer schedule by five per cent to reduce cancellations and delays as parent company IAG eyes a post-pandemic recovery from heavy losses towards profit for the remainder of the year.
The airline struggled with staff shortages at this year’s star, compounded by ongoing IT problems as passengers returned in large numbers following the end of Covid regulations.
Shares in IAG, which also owns Iberia, Vueling and Aer Lingus, fell eight percent in early trade, making it the worst-performing FTSE100 stock.
However, the company said a rebound in business travel and travel by wealthy passengers will lead to a return to profitability starting in the second quarter.
Chief Executive Luis Gallego said the cost of dealing with the BA disruption was the main reason first-quarter operating losses were 754 million euros — much worse than analysts’ forecast of 510 million.
The company has lowered its full-year group capacity guidance to about 80% of 2019 levels from 85% “to give more stability for the summer,” Gallego said.
“Demand is recovering strongly in line with our previous expectations,” he added. “Premium Leisure continues to be the best performing segment and business travel is at its highest level since the pandemic began.”
Capacity on routes over the North Atlantic will be “nearly fully restored” between July and September, Mr Gallego said.
BA has canceled thousands of flights in recent weeks due to staff shortages and illness.
Mr. Gallego added: “The global travel industry is facing challenges due to the largest expansion in business in history and British Airways is no exception. The welcome lifting of strict travel restrictions in the UK, combined with strong pent-up demand, have contributed to a steep increase in capacity.”
British Airways has reduced short-haul flights to “give confidence to the customer and stability to the programme,” he said.
The BA staff absenteeism rate has been around 7% over the past few months, compared to 4-5% normally.
Mr Gallego said the airline has enough pilots but suffers from a “major problem” in recruiting for ground handling roles.
An average of 103 days over the past few months to reference new hires so they can start work “didn’t help,” he added.
“That’s about 20% more than the numbers we had before.”
He attributed the delay to many people having gaps or changes in their employment histories caused by Covid-19.
The chief executive also accused Heathrow of underestimating passenger numbers, meaning the airport is “lacking resources”.
This makes it “impossible to run the capacity we have in our heads,” he claimed.
https://www.independent.co.uk/news/business/news/british-airways-cancellations-profits-capacity-travel-leisure-b2073034.html British Airways parent company IAG is posting heavy losses due to flight cancellations