IAG’s chief executive Willie Walsh is to delay his planned retirement, as the group sets out plans to reduce capacity and cut costs in the light of the ongoing coronavirus pandemic.
Walsh had been due to step down as CEO on March 26, ahead of his retirement in June, with Iberia’s current CEO Luis Gallego set to replace Walsh as chief of the airline group.
But in a statement IAG said:
“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 to lead the response in Spain.
“In the meantime, Willie Walsh will continue to act as Group chief executive and Javier Sanchez will remain in place as Vueling chief executive.”
Last week BA’s CEO Alex Cruz warned staff of unprecedented route cuts, and IAG now says that it will cut capacity across the group by 75 per cent in April and May, compared with the same period in 2019.
The group said it would take actions to reduce operating expenses and improve cash flow, including “grounding surplus aircraft, reducing and deferring capital spending, cutting non-essential and non-cyber related IT spend, freezing recruitment and discretionary spending, implementing voluntary leave options, temporarily suspending employment contracts and reducing working hours”.
IAG stressed that it has strong liquidity, with cash, cash equivalents and interest-bearing deposits of €7.35 billion as at March 12, in addition to €1.9 billion in undrawn general and committed aircraft backed financing facilities.
Commenting on the news 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.”