Walsh to stay on as IAG cuts capacity by 75 percent

Aviation industry veteran Willie Walsh has agreed to defer his retirement as head of International Airlines Group (IAG) as it plans capacity cuts of 75 percent in April and May. IAG  —  which owns British Airways, Aer Lingus. Iberia, Level and Vueling — is the latest big airline group responding to plummeting demand caused by the spread of COVID-19 and associated government travel restrictions and advisories. Action by IAG so far has included suspending flights to China, reducing capacity on Asian routes and canceling flights to and in Italy. READ: United to halve capacity as some carriers halt international flying. But it said the announcement by US President Donald Trump to restrict entry to foreigners from Europe had added uncertainty to North Atlantic routes. It also faced restrictions by countries such as  Argentina, Chile, India and Peru and advisories affecting markets such as Spain. “We have seen a substantial decline in bookings across our airlines and global network over the past few weeks and we expect demand to remain weak until well into the summer,’’ Walsh said. “We are therefore making significant reductions to our flying schedules. We will continue to monitor demand levels and we have the flexibility to make further cuts if necessary. “We are also taking actions to reduce operating expenses and improve cash flow at each of our airlines. IAG is resilient with a strong balance sheet and substantial cash liquidity." The group expects first-quarter capacity to be down 7.5 percent but said it planned cuts of at least 75 percent in April or May compared to last year. Action to reduce operating expenses and improve cash flow included grounding surplus aircraft, reducing and deferring capital spending and cutting non-essential and non-cyber related IT spend. It is also freezing recruitment and discretionary spending, implementing voluntary leave options, temporarily suspending employment contracts and reducing working hours. The group was unable to give profit guidance but said it had had strong liquidity with cash, cash equivalents and interest-bearing deposits of €7.35 billion as at  March 12. There were also undrawn general and committed aircraft-backed financing facilities amounting to €1.9 billion, resulting in total liquidity of €9.3 billion. The crisis in Spain means Iberia chief executive Luis Gallego will remain chief executive of Iberia for the next few months while Walsh will stay at the helm of the group and Javier Sanchez will remain in place as Vueling chief executive. Walsh had been due to retire June 30 and stand down from his role on March 26. "As we respond to COVID-19, Willie, Luis and the board of IAG have decided that management stability across the Group should be a priority in the near term,’’ said IAG chairman  Antonio Vazquez, “We are grateful that Willie has agreed to delay his retirement for a short period at this challenging time."