British Airways is to raise €2,741 billion to help it navigate the Covid crisis as it announced further capacity cuts for the rest of the year.
The airline said the funds ‘should enable the Group to emerge from the current pandemic in a strong position’.
The airline also said it has reached agreements with pilots, engineers and customer service staff, while an ‘agreement in principle’ has also been struck with Unite over terms for cabin crew.
In a trading update, BA said its number of flights will be cut further between October and December, with the airline operating only 40% of its 2019 capacity.
It has initially planned capacity cuts in Q4 of 46%.
BA said June bookings had picked up after a ‘complete cessation’ in April and May, but were still down 70% on last year.
But since July, BA said overall bookings had ‘levelled off’ with short-haul demand falling following the introduction of quarantine restrictions.
The carrier said it was ‘encouraged’ by the level of pent-up demand in markets where no travel restrictions for quarantine rules are in place.
BA said its overall 2020 capacity has been reduced by 63% compared to 2019, having previously cut 59% of seats.
Capacity in Q3 has been cut by 78% compared to 2019, up from 74% previously planned.
The number of available seats in 2021 will be reduced by 27% having initially planned for a 24% cut.
“Despite a lower capacity in 4Q 2020 than under the previous planning scenario, the Group continues to expect that it would reach breakeven in terms of Net cash flows from operating activities during 4Q 2020,” BA said. “This is as a result of mitigating actions taken to reduce operating expenses further and enhance working capital.”
Long haul has continud to struggle, BA said.
“As anticipated, IAG has seen a delayed recovery of long-haul booking activity, impacted by the continued existence of travel restrictions to many long-haul destinations, including North and South America,” it said.
Long-haul bookings have seen a modest increase since mid-August.
The airline added there was no change to its expectation that it will take until at least 2023 for passenger demand to recover to 2019 levels.