British Airways owner IAG is, like the rest of its industry, facing an existential crisis. If it was a jet plane IAG would effectively be spluttering away on a single engine and with a new pilot in the cockpit too in the form of incoming CEO Luis Gallego.
“Nobody could have imagined at the start of 2020 that aviation would effectively be grounded for months at a time, with demand outside of that at a fraction of previous levels, thanks to a global pandemic.
“However, that is where we are. All IAG can do is hunker down in survival mode and hope that improvements in testing, treatment and delivery of the long hoped for vaccine can chart its path out of this crisis,” said AJ Bell.
“The problem for IAG and other airlines is that they incur huge costs even when planes are not in the air and stand to lose millions or even billions when passenger volumes are this depressed.
“On the flip-side if they take out too much capacity they could find their ability to recover materially compromised.
“The question in the short term is whether the money raised in September’s rights issue will be enough to see the company through the current turbulence.”
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