IAG, the matrix of companies such as Iberia and Vueling, today announced the launch of a drastic package of measures to protect your business against coronavirus. The group expects area capacity, in terms of available seat-kilometers, in the first quarter of 2020 to decrease by around 7.5% compared to last year. For April and May, the group has announced that It plans to reduce capacity by at least 75% compared to the same period in 2019.
IAG is also taking “steps to reduce operating expenses and improve cash flow.” These include leaving surplus aircraft on the ground, reducing and deferring investments, cutting non-essential expenses as well as costs not related to the cybersecurity program, freezing recruitment and discretionary spending, implementing unpaid voluntary vacation options, temporarily suspending employment contracts and reduce working hours.
Given the continuing uncertainty regarding the potential impact and duration of COVID-19, IAG assures that “it is not yet possible to provide an accurate indication of the prospects of profit for the year 2020.”
The group has assured that it is financially prepared to resist the onslaught of the coronavirus since it has “a solid position of liquidity with a box, equivalent liquid assets and remunerated deposits of € 7.35 billion as of March 12, 2020. In addition, the lines of general and committed loans guaranteed by aircraft amount to 1,900 million euros, resulting in a total liquidity of 9,300 million euros ”, as explained
Willie Walsh, CEO of IAG, assured that the company has seen “a substantial decrease in reservations in our airlines and in the global network in recent weeks and we expect demand to remain weak until well into the summer. Therefore We are making significant reductions in our flight programs. We will continue to monitor demand levels and have the flexibility to make more cuts if necessary. We are also taking steps to reduce operating expenses and improve cash flow in each of our airlines, IAG is resilient with a solid balance sheet and substantial cash liquidity, “he concluded.
In light of the exceptional circumstances facing the aviation industry due to COVID-19, and in particular the evolution of the situation in Spain, IAG has decided that Luis Gallego will continue in his position as CEO of Iberia for the next few months “to lead the response in Spain”. At the same time, Willie Walsh will continue in his position as CEO of the group and Javier Sánchez Prieto will remain in the position of CEO of Vueling. Antonio Vázquez, President of IAG, stated that “in the context of COVID-19, Willie, Luis and the IAG Board of Directors have decided that managerial stability throughout the group should be a priority in the short term. We are grateful that Willie has agreed to delay his retirement for a short period in this challenging time. ”