Willie Walsh defers IAG retirement to tackle Covid-19

Willie Walsh is to defer his retirement and continue as group chief executive of Aer Lingus parent International Airlines Group (IAG) as the company continues to grapple with the coronavirus pandemic.

In a statement on Monday, IAG said the rapid spread of Covid-19 and associated government travel restrictions were having a “significant and increasingly negative impact” on the demand for global air traffic on almost all routes it operates.

To date IAG has suspended flights to China, reduced capacity on Asian routes, cancelled all flights to, from and within Italy and made various changes to its network.

The announcement by US president Donald Trump to restrict entry of foreign nationals who have been in countries in the Schengen Area, the UK and Ireland has "added to the uncertainty" on North Atlantic routes.

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In addition, many other countries have banned or are restricting inward travel including Argentina, Chile, India and Peru. Spain has also been the subject of travel advisories, for example by the UK Foreign and Commonwealth Office.

IAG said it would implement further initiatives in response to this challenging market environment.

Capacity, in terms of available seat kilometres, in the first quarter of 2020 is now expected to be reduced by around 7.5 per cent compared to last year.

For April and May, the group plans to reduce capacity by at least 75 per cent compared to the same period in 2019.

IAG is also taking actions to reduce operating expenses and improve cash flow. These include grounding surplus aircraft, reducing and deferring capital spending, and cutting non-essential and non-cyber related IT spend.

It also said it would freeze recruitment and discretionary spending, implement voluntary leave options, temporarily suspend employment contracts and reduce working hours.

“Given the continued uncertainty on the potential impact and duration of Coviv-19, it is still not possible to give accurate profit guidance for the full year 2020,” it said.

The group has strong liquidity with cash, cash equivalents and interest-bearing deposits of €7.35 billion as at March 12th. In addition, undrawn general and committed aircraft backed financing facilities amount to €1.9 billion, resulting in total liquidity of €9.3 billion.

IAG chief executive Willie Walsh said: “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.

“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.”

IAG said that in light of the exceptional circumstances facing the aviation industry due to Covid-19, and in particular the developing situation in Spain, it has been decided that Luis Gallego will continue in his role as Iberia chief executive for the next few months.

In the meantime, Willie Walsh will continue to act as group chief executive and Javier Sanchez will remain in place as Vueling chief executive.

IAG chairman Antonio Vázquez, said: “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.

“We are grateful that Willie has agreed to delay his retirement for a short period at this challenging time.”