IAG Plans Q3 Capacity Below Half of 2019 Levels


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International Airlines Group continues to slowly rebuild capacity, though the group reported an immediate response in demand when England announced it would lift quarantine requirements on fully vaccinated U.S. visitors.

The group reported passenger revenue of €682 million in the second quarter, a big bump year over year but still a small fraction of the €6 billion in passenger revenue it reported in the second quarter of 2019. Capacity for the quarter was 21.9 percent of what it was in 2019. The group expects third-quarter capacity will be about 45 percent of 2019 levels, but that remains “uncertain and subject to ongoing review.”

The “traffic light” system of Covid-19 risk introduced by the United Kingdom during the quarter “severely” constrained capacity, as did restrictions on U.K. travelers from other countries as the delta variant spread, according to the group. Restrictions in Ireland also have constrained Aer Lingus’ capacity, and its average load factor was around 20 percent for the quarter.

Iberia saw stronger performance on its routes to Colombia and Ecuador, as did Vueling on routes from Spain to the Canary Islands and Balearic Islands.

IAG CEO Luis Gallego in a statement said that Iberia’s and Vueling’s results show “evidence of widespread pent-up demand when travel restrictions are lifted.”

“They were the best performers within the group in the second quarter, reflecting strong Latin American and Spanish domestic markets driven by fewer travel restrictions,” he said. “We know that recovery will be uneven, but we’re ready to take advantages of a surge in air travel demand in line with increasing vaccination rates.”

The announcement this week that fully vaccinated EU and U.S. visitors would be welcomed in England without quarantine provided additional evidence, as British Airways reported that new bookings from the U.S. jumped by 95 percent within hours of that announcement. As such, British Airways on Friday announced it was boosting capacity from several U.S. cities over the next few weeks.

Starting Aug. 16, service between London Heathrow and New York’s John F. Kennedy International Airport will increase from 17 to 21 per week, and service between London and both Los Angeles and Chicago will increase from seven to 10 flights per week. British Airways will further increase Los Angeles service to 14 per week starting Aug. 23, when it also will increase Seattle service from four to seven flights per week.

The carrier plans to continue expanding its U.S. schedule in September. It also is adding capacity to Berlin, Geneva and Hamburg.

Even with that boost of optimism, the group said it will take “until at least 2023” before passenger demand returns to pre-Covid-19 levels. 

The group reported a loss of €1.05 billion for the second quarter, compared with a €1.41 billion loss in the second quarter of 2020.

RELATED: IAG Q1 earnings

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