Shares in International Airlines Group (IAG) fell 3% after it launched a plan to shrink its main British Airways business, axing staff numbers by a quarter as it warned of a slow recovery from the coronavirus pandemic.
With no end in sight for the travel bans which have brought flying to a near-halt, airlines across the world are facing deep uncertainty and heavy future losses, and no visibility on how and when operations can restart.
British Airways could make up to 12,000 staff redundant, its parent company said on Tuesday April 28, as it forecast that passenger numbers will take years to recover from the crisis. BA has 45,000 employees, including 16,500 cabin crew and 3,900 pilots.
Traders said that that IAG's shares fell due to the warning over demand and after first quarter results came in worse than expected. Its stock has lost 64% of its value in the last three months.
Contrast With Rivals
The radical shake-out planned at IAG to help it survive the coronavirus crisis contrasts with moves at rival big European airline groups Air France-KLM and Lufthansa, which are both hoping that government bailouts will see them through.
Lufthansa said on April 28 that it could seek some form of protection from creditors while talking to the Berlin government about a €9 billion rescue package.
But IAG's chief executive, Willie Walsh, has long-opposed state-backed rescues for airlines, and BA said on April 28 that there is "no government bailout standing by for BA".
IAG, which also owns Aer Lingus, Iberia and Vueling, has, however, used government furlough schemes to help pay staff who have been temporarily suspended while planes are not flying.
In A Better Position Than Its Peers
Analysts have pointed to IAG's strong financial position, saying that it had €9.5 billion available at the end of March, and that this means that IAG is in a better position than its peers.
"[This] gives some reassurance to investors that IAG will be one of the survivors and possible long-term beneficiaries of this current crisis," Goodbody analyst Mark Simpson said.
On Wednesday April 29, Finnair announced plans to raise €500 million through a rights offering that would be almost as large as its current equity.
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