FTSE 100

IAG share price: company reports first quarter loss of €1bn+

IAG (LON: IAG) (IAG.L) has released first quarter results that show continued financial challenges.

IAG (LON: IAG) has today released share price news. It has updated the UK stock market on its first-quarter performance. Its results highlight the ongoing challenges it is experiencing due to Covid-19.

The British Airways owner recorded a 78.9% decline in total revenue during the quarter. This was largely due to passenger capacity in the period being less than 20% of the same quarter from 2019. It expects this situation to largely persist in the second quarter, where it anticipates a modest rise in passenger capacity to 25% of 2019 levels. However, it reiterates in today’s update that it remains uncertain about exact figures in future periods.

IAG’s decline in revenue contributed to a loss after tax in excess of €1 billion. This compares to a loss of almost €1.7 billion in the same quarter of the previous year.

The firm has continued to focus on improving its financial position. It was able to increase liquidity during the quarter by €200 million so it now stands at €10.5 billion. This was driven by the successful conclusion of financing initiatives in the quarter, while ongoing cost reduction measures also strengthened its financial position. For the quarter, cash operating costs were cut to €175 million per week. In addition, it agreed a UK pension contribution deferral during the quarter, while debt issues and updated credit lines were also concluded in the period.

In response to lower passenger demand, IAG sought to increase cargo-only flights. Indeed, the number of cargo-only flights it operated increased from 969 in the previous quarter to 1,306 in the first quarter of the current year. They generated €350 million in total revenue, which is a record for the first quarter of the year.

Commenting on the first quarter results, IAG’s CEO Luis Gallego stated: “We’re doing everything in our power to emerge in a stronger competitive position. We’re absolutely confident that a safe re-start to travel can happen as shown by the scientific data… Travel underpins a global industry that supports 13 million jobs in Europe alone. There’s a high level of pent-up demand and aviation will play a critical role in reconnecting people and getting economies back up and running again”.

In the past year, the IAG share price has risen by 60%. Over the past five years it is down by 40%. By comparison, the FTSE 100 index (INDEXFTSE: UKX) is up 20% and has gained 15% over the same one year and five-year time periods. IAG’s shares currently trade at 207p at the time of writing.

Not Investment Advice Note: Views expressed are those of the writer. The author does not own any stocks mentioned. The article is information, not advice. Share prices can rise and fall. Past returns are not a guide to the future. Please do your own research.

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