BA parent IAG has put planned management changes on hold as it battles to cope with the impact of the coronavirus pandemic.
The airline group says capacity in April and May will be slashed by 75% as travel restrictions due to COVID-19 bite.
In an update issued this morning on the crisis, the airline group said available seat kilometres in the first quarter of 2020 will be down 7.5%.
But the airline is facing travel restrictions globally and slumping demand on all routes operated by IAG’s brands.
In light of the exceptional circumstances, it has been decided that Luis Gallego will continue in his role as Iberia chief executive for the next few months to lead the response in Spain.
And IAG chief executive Willie Walsh will continue to act as group chief executive and Javier Sanchez will remain in place as Vueling chief executive.
Antonio Vázquez, IAG chairman, added: “As we respond to COVID-19, Willie, Luis and the board of IAG have decided that management stability across the Group should be a priority in the near term.
“We are grateful that Willie has agreed to delay his retirement for a short period at this challenging time.”
To date, IAG has suspended flights to China, reduced capacity on Asian routes, cancelled all flights to, from and within Italy and made various changes to our network.
The firm said: “The US presidential announcement to restrict entry of foreign nationals who have been in countries in the Schengen Area, the UK and Ireland has added to the uncertainty on North Atlantic routes.
“In addition, many other countries have banned or are restricting inward travel including Argentina, Chile, India and Peru. Spain has also been the subject of travel advisories, for example by the UK Foreign and Commonwealth Office (FCO).”
IAG said it is also taking actions to reduce operating expenses and improve cash flow.
These include grounding surplus aircraft, reducing and deferring capital spending, cutting non-essential and non-cyber related IT spend, freezing recruitment and discretionary spending, implementing voluntary leave options, temporarily suspending employment contracts and reducing working hours.
The statement from IAG said: “The Group has strong liquidity with cash, cash equivalents and interest-bearing deposits of €7.35 billion as at March 12. In addition, undrawn general and committed aircraft backed financing facilities amount to €1.9 billion, resulting in total liquidity of €9.3 billion.”
Walsh said: “We have seen a substantial decline in bookings across our airlines and global network over the past few weeks and we expect demand to remain weak until well into the summer.
“We are therefore making significant reductions to our flying schedules. We will continue to monitor demand levels and we have the flexibility to make further cuts if necessary.
“We are also taking actions to reduce operating expenses and improve cash flow at each of our airlines. IAG is resilient with a strong balance sheet and substantial cash liquidity.”
Given the continued uncertainty on the potential impact and duration of COVID-19, it is still not possible to give accurate profit guidance for the full year 2020.
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