British Airways owner International Airlines Group plans a “meaningful return to service” from July after being battered by the Covid-19 crisis.

But IAG warned that it does not expect the level of passenger demand in 2019 to recover before 2023 and capacity for this year will be 50% below pre-coronavirus levels.

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Further group-wide restructuring measures will be “essential” following BA announcing 12,000 redundancies.

IAG expects to defer deliveries of 68 aircraft.

The company, which also owns Aer Lingus, Iberia and Vueling, reported a first quarter loss after tax of €556 million against a €70 million profit in the same period last year.

Total operating losses after €1.32 billion of exceptional charges for fuel and foreign exchange hedges came to €1.86 billion.

IAG said: “The results for the quarter were significantly impacted by the outbreak of Covid-19, which has had a devastating impact on the global airline and travel sectors, with the spread of the virus worldwide, resulting in lockdowns and travel restrictions and advisories, particularly from late February 2020 onwards.”

The group warned that the second quarter will be “significantly worse” with capacity slashed by 94% from late March.

Costs have been more than halved for April and May from €440 million per week to €200 million a week.

Capital spending for 2020 has also been reduced by €1.2 billion, with most of the remaining €3 billion covered by committed and agreed financing

The group revealed it is as accessing the UK’s Coronavirus Corporate Finance Facility and the equivalent scheme in Spain in addition to extending BA’s revolving credit facility.

The company said: “IAG is planning a meaningful return to service in July with a planning scenario that could see an overall reduction in passenger capacity of circa 50% in 2020, but these plans are highly uncertain and subject to the easing of lockdowns and travel restrictions.”

Warning on second quarter losses, IAG pointed to a “substantial decline in passenger capacity and traffic and despite some relief on employee costs from government wage support schemes and various management actions”.

Chief exeutive Willie Walsh said: “The operating result up to the end of February was in line with a year ago.

“However, March’s performance was severely affected by government travel restrictions due to the rapid spread of Covid-19 which significantly impacted demand. Most of the loss in the quarter occurred in the last two weeks of March.

“We had a strong balance sheet and liquidity position coming into this crisis.

“We are taking all appropriate actions to preserve cash, reduce and defer both capital spending and operating costs and secure additional financing in order to strengthen and maintain our liquidity. At the end of April our liquidity stood at €10 billion.

“We are planning for a meaningful return to service in July 2020 at the earliest, depending on the easing of lockdowns and travel restrictions around the world.

“We will adapt our operating procedures to ensure our customers and our people are properly protected in this new environment.

“We are working with the various regulatory bodies and are confident that changes in regulations will enable a safe and organised return to service.

“The industry will adapt to new requirements in the same way that it has adapted to developments in security requirements in the past.

“However, we do not expect passenger demand to recover to the level of 2019 before 2023 at the earliest.

“This means group-wide restructuring is essential in order to get through the crisis and preserve an adequate level of liquidity. We intend to come out of the crisis as a stronger group.”

Meanwhile, IAG revealed that Iberia boss Luis Gallego will succeed Walsh as group chief executive on September 24. Walsh delayed his retirement in March to respond to the Covid-19 crisis.