British Airways owner IAG expects travel recovery from July

© Reuters. FILE PHOTO: A British Airways plane taxis past tail fins of parked aircraft near Terminal 5 at Heathrow Airport in London, Britain, March 14, 2020. REUTERS/Simon Dawson

By Sarah Young

LONDON (Reuters) -British Airways owner IAG (LON:ICAG) is confident travel will recover from July onwards after forecasting only a minimal increase in its capacity to 25% for the April to June quarter.

IAG, which also owns Iberia and Vueling in Spain and Aer Lingus in Ireland, declined to forecast how much it would fly from July but said the recovery would be properly underway by then after more than a year of pandemic restrictions.

"We consider in the second half that we are going to be flying and we are prepared for that," IAG Chief Executive Luis Gallego told reporters on Friday after the company posted a loss of 1.14 billion euros ($1.4 billion) in the first quarter.

Before July, however, Gallego said government action was needed on some issues, such as opening travel corridors between countries with high vaccination rates, including the United Kingdom and the United States.

The rise to 25% of pre-pandemic capacity puts IAG's plans behind those of rival airlines, and is only a marginal increase from the 19.6% it flew in the first three months of 2021.

Britain, which along with Spain is one of IAG's main markets, is set to publish later on Friday its "green list" of low risk places where people can travel without needing to quarantine on their return.

Gallego said IAG was expecting only a small list of countries initially with more being added from June onwards.

"Part of the reason we're not giving guidance (for third-quarter capacity) is simply because we don't know what's on the green list yet," Chief Financial Officer Steve Gunning said.

Air France-KLM expects to operate 50% of its pre-pandemic flight capacity in the second quarter, picking up to 55% to 65% in July-September. Lufthansa expects to fly at about 40% of its pre-pandemic capacity for 2021 as a whole.

IAG's first-quarter operating loss before exceptional items of 1.14 billion euros was slightly better than the 1.17 billion euro loss forecast by analysts.

Shares in the company, which have risen 30% since the beginning of the year, traded up 0.7%.

"The company delivered a solid set of results and is pointing to the start of the recovery into the summer," Goodbody analyst Mark Simpson said.

Given the ongoing uncertainty over COVID-19, IAG said it could not provide a profit outlook for 2021.

($1 = 0.8282 euros)