British Airways-owner IAG trims capacity plans to avoid disruptions

British Airways owner IAG (ICAG.L) has scaled back plans to ramp up short-haul capacity at Heathrow airport, saying a cut of around 5 per cent to its summer schedule would provide stability for passengers and avoid disruptions seen earlier in the year.

The company, which also owns Iberia, Vueling and Aer Lingus, has struggled to cope with Omicron-related crew absences and a shortage of ground staff. That was compounded by IT problems, resulting in flight cancellations in the first quarter.

Chief Executive Luis Gallego said the cost of dealing with the issues was the main reason the company’s first-quarter operating loss of 754 million euros missed average analyst forecasts of a 510 million euro loss by a wide margin.

Shares in the company were down 8 per cent at 132 pence in early trading, the worst performing FTSE 100 stock.

The company lowered its full-year group capacity guidance to around 80 per cent of 2019 levels from its February forecast of 85 per cent “to give more stability for the summer”, Gallego said.

IAG said it had seen a strong recovery in business travel in the first quarter and it expected to post operating profits from the second quarter onwards and for the full year.

The easing of government-imposed travel restrictions, particularly in Britain, resulted in improved travel demand, it said, with no noticeable impact from the war in Ukraine.

“Demand is recovering strongly in line with our previous expectations,” Gallego said, adding that the company was focused on improving operations, customer experience and resilience.