IAG sees signs of pent-up demand for business travel, with easing lockdown key

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IAG, parent of British Airways, Iberia, Aer Lingus and Vueling, cited increased booking activity after the U.K. announced a government review of procedures to restart international travel.
IAG, parent of British Airways, Iberia, Aer Lingus and Vueling, cited increased booking activity after the U.K. announced a government review of procedures to restart international travel. Photo Credit: Vytautas Kielaitis/Shutterstock.com

British Airways parent International Airlines Group is seeing some long-haul booking spikes concurrent with announcements of potential easing of the U.K. federal lockdown, according to the carrier group, offering a silver lining of potential pent-up business travel demand after a difficult fourth quarter of 2020.

IAG, also parent of Iberia, Aer Lingus and Vueling, on Friday reported fourth-quarter passenger revenue declined more than 87% year over year to $826 million, and the company lost more than $1.9 billion during the quarter before taxes. Still, IAG CEO Luis Gallego pointed to recent booking trends as a sign that pent-up demand exists particularly for leisure travel but also some business travel, including long-haul.

Gallego cited increased booking activity after U.K. prime minister Boris Johnson on Feb. 22 announced a government review of procedures to restart international travel.

"Bookings at BA have surged since prime minister made known the U.K. government lockdown exit plans on Feb. 22," Gallego said Friday during the carrier's quarterly earnings call. "On the day itself, flight-only bookings increased by over 60% and BA Holidays by 200% compared to the same time period a week ago. There was an even stronger rate of bookings on Feb. 23. For example, BA Holidays was up 560% compared to the previous week. Booking activity has also been strong during the rest of the week."

While business travel pent-up demand might not be quite as dramatic, Gallego said he nevertheless expects a spike as lockdowns ease and vaccines proliferate, but reaching pre-pandemic levels of demand remains a multi-year process.

"In the case of traveling for work, I think, first of all, different companies and the individual both need to be accepting the risk of traveling during the pandemic period," he said. "But we think that after these quarantines are removed, there are a lot of customers that are willing to travel -- and we know that it's not the same, and we have learned during this year to do business with Teams or Zooms -- [but] there are a lot of activities that require face-to-face meetings."

Still, Gallego said of business travel volume, "As we have always said, we consider that in 2023, 2024, we can come back to the levels that we have in 2019."

IAG's fourth-quarter passenger capacity was 26.6%, down 73.4% year over year. For full-year 2020, passenger capacity was 33.5%, down 66.5% from 2019. IAG's full-year passenger revenue was $6.7 billion, down 75.5% year over year, and the carrier's annual operating loss in 2020 was nearly $9 billion, compared with a $3.1 billion profit in 2019.

Embleton named Aer Lingus CEO

IAG also named IAG Cargo chairman and chief executive Lynne Embleton as CEO of Aer Lingus. Embleton, who also has held roles at British Airways, replaces Donal Moriarty, who has served as interim CEO since former CEO Sean Doyle was named BA CEO in October. Moriarty will return to his former position of Aer Lingus chief corporate affairs officer, according to IAG.

Source: Business Travel News

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