British Airways in Covid fog as summer comes to Air France

Bloomberg

British Airways parent IAG SA is stuck on the starting blocks amid lingering coronavirus curbs as one of its biggest European competitors reaps the benefits of a late-summer travel rebound.
London-based IAG, which also owns Spain’s Iberia and Aer Lingus of Ireland, provided no guidance in an earnings update and said it will offer only 45% of 2019 capacity this quarter. Rival Air France-KLM, by contrast, plans to fly up to 70% of its usual seats and said it’s set for a return to profit.
British Airways, usually IAG’s biggest profit generator, has suffered from tougher UK travel restrictions even as a reopening in the European Union spurs traffic at Air France and discounters like Ryanair Holdings Plc. While curbs have begun to ease, the late start has taken its toll. The US border meanwhile remains closed for the whole of Europe, hurting all network airlines and especially BA, for which the North Atlantic has been particularly lucrative.
Sanford C Bernstein analyst Daniel Roeska said in a note that a more extensive US reopening is the “important catalyst” that IAG is missing. Air France-KLM’s operational recovery, by contrast, is ahead of expectations, with occupancy levels “looking quite respectable.” IAG reported a
second-quarter adjusted operating loss of 1.05 billion euros ($1.3 billion) that was
slightly worse than analysts had predicted.
Air France-KLM’s 248 million-euro loss before interest, taxes, depreciation and amortisation was ahead of estimates and should turn into a profit this quarter, according to the company. Chief Financial Officer Steven Zaat said “fantastic ticket sales” have halted cash outflows.
Low-cost carriers have also been upbeat about summer prospects, with Ryanair saying it expects to post a profit and Wizz Air Holdings Plc on course to be the first major European airline to return capacity to 100% of pre-Covid levels.
IAG Chief Executive Officer Luis Gallego attributed the difference to his company’s strong focus on North and South Atlantic services, though the easing of travel restrictions on some Latin American long-haul routes contributed to Iberia — along with discounter Vueling — being the group’s best quarterly performer.