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Tuesday, August 9, 2022

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    British Airways’ Parent Company To Lose $16bn


    The coronavirus pandemic has posed serious problem for the airline industry globally.

    Parent company of British Airways, the International Airline Group (IAG) is due to lose some $1.6 billion on fuel-hedging alone

    The coronavirus pandemic, coupled with a Saudi Arabia-Russia price war, has caused fall in oil prices to historic lows.

    According to report, airlines are set to lose a big amount of money due to the development.

    While revenue streams are drying up, fixed costs still flowing out.

    And one of the biggest problems for the airline industry, report suggest, fuel and its price.

    As fuel prices dropped, hedges on prices that could be considered normal under ordinary market conditions, were too high and airlines lost a fair share of cash, reports aviation portal, Aerotime.

    IAG is the parent company of Aer Lingus, British Airways and Iberia, and two low-cost brands LEVEL and Vueling.

    Reports say it is set to take an exceptional charge of $1.6 billion (€1.5 billion) because of over-hedging towards the full-year bill.

    For the first quarter of 2020 alone, the exceptional charge that is also related to currency fluctuations equaled to $1.42 billion (€1.32 billion).

    Overall, IAG posted an operating loss of $1.9 billion (€1.8 billion), as revenues and capacity fell by 14.5% and 10.5% compared to Q1 2019, respectively.

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