British Airways parent slows growth amid staff shortage

Bloomberg

British Airways parent IAG SA reported worse-than-expected earnings and tempered plans to boost capacity after staffing shortages at London’s Heathrow airport slowed its UK expansion.
Shares of IAG fell 12%, the biggest drop in almost six months, after the company reported a first-quarter operating loss of $769 million. Operations were hit by IT glitches together with the reduced growth at Heathrow as British Airways grappled with a requirement for 4,000 recruits.
IAG now aims to provide 80% of its 2019 capacity in 2022, down from the 85% touted in February, providing a breathing space as it seeks to boost resilience at the Heathrow operation. Chief Executive Officer Luis Gallego said seating on key North Atlantic routes should still be close to normal by the summer peak.
The labour squeeze comes after British Airways fired 10,000 workers during the Covid pandemic rather than furlough them, and means the carrier risks missing out on a travel bonanza as curbs end. Deutsche Lufthansa AG and Air France-KLM said they’re increasingly confident that surging demand will spur a summer boom as people head for the beach after two years of restrictions.
Sanford C Bernstein analyst Alex Irving said the first-quarter result looked “ugly” for IAG and that it had adopted a noticeably “more measured tone” compared with the bullish outlooks of its German and French rivals.
Gallego reiterated that the group expects to be profitable for the current quarter and the full year, spurred by bookings now at 90% of pre-pandemic levels amid strong premium-leisure sales and a return of business travel.
He said the ramp-up at Spanish arm Iberia has been less tortuous because it let fewer people go than British Airways at the height of the pandemic. Overall, BA expects to operate 74% of 2019 capacity during 2022, compared with 86% at Iberia, 88% at Ireland’s Aer Lingus, and 100% at discount division Vueling.
“We are adjusting the capacity of British Airways in order to give more stability for the summer,” the CEO said. “We are reducing the scheduled program, mainly the short haul. What we want in the end is to give convenience to the customer and stability to the program.”
The changes will affect about 10% of BA’s planned Heathrow schedule through the end of October.