# British Airways owner IAG suffers record €7.4 billion loss

That compared with a €2.6 billion profit in 2019, highlighting the scale of the challenges facing the airline industry as new strains of the coronavirus that causes COVID-19 continue to shut borders and ground aircrafts.

IAG’s operating loss before exceptional items came in at €4.4 billion, slightly better than analysts’ expectations.

Total group revenue fell 69% during the year, to €7.8 billion, as IAG
IAG,
+2.73%
— which also owns Iberia, Aer Lingus and Vueling — flew just a third of its normal schedule in 2020. Capacity for the first quarter of 2021 will be 20% of 2019 levels, down from the previous quarter’s 27%, the company said.

Luis Gallego, IAG’s chief executive who took over from Willie Walsh in September, said 2020 had been a year of crisis for the airline industry, but that vaccinations were progressing well and infection rates “are going in the right direction.”

Shares in IAG, which have fallen by 50% over the last year, compared with a decline of 6% for the wider FTSE 100, rose 3.92% in early London trading on Friday.

U.K. airline stocks were given a boost earlier this week after Prime Minister Boris Johnson announced his road map to take England out of its third lockdown.

Read: Airlines and travel stocks surge as U.K. sets out lockdown exit plans

EasyJet
EZJ,
+2.62%,
Ryanair
RYA,
+0.61%,
and TUI
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-0.28%
all reported a jump in bookings to destinations including Spain and Greece, after Johnson said international trips could potentially resume from May 17, subject to review and if there was no resurgence in coronavirus. But it is still unclear whether that will include IAG’s long-haul routes.

“Getting people traveling again will require a clear road map for unwinding current restrictions when the time is right,” said IAG’s Gallego, as he called for international common testing standards and the introduction of digital health passes “to reopen our skies safely.”

Read: Europe moves toward COVID-19 vaccine passports but not every country is on board

Passenger revenue dropped 75.5% from €22.5 billion to €5.5 billion. Given the uncertainty and duration of the coronavirus crisis, IAG
IAG,
+5.26%
couldn’t provide profit guidance for 2021, the company said.

“IAG’s biggest problem is not a pickup in passengers on an economic reopening. It will be able to benefit from the return of domestic passengers like its smaller peers easyJet and Ryanair,” said Michael Hewson, chief market analyst at CMC Markets U.K. “Its main problem will be getting the same levels of long-haul business travel that it had before the pandemic. This is where most big carriers make their money, and it is here that normal service may well take a little longer to return to the same levels they were in 2019.”

Read: COVID-19 hotel quarantine from high-risk countries to start in U.K. from Feb. 15

The airline group has taken steps to bolster its liquidity, which currently stands at €10.3 billion, following a €2.7 billion capital increase and a £2 billion U.K. export finance loan commitment. “This is higher than at the start of the pandemic,” Gallego said, adding that the group continues to reduce its cost base to ensure it emerges “in a stronger competitive position.”.

Net debt stood at €9.8 billion at the end of 2020, almost 30% higher than the previous year.