International Airlines Group (IAG) has published its interim management report for the six months to June 30, 2021, reporting an operating loss of €2 billion for the first half of the year.

Second quarter capacity across the group’s carriers was just 21.9 per cent of 2019 levels, as government restrictions and quarantine requirements continue to hamper recovery.

IAG hopes to increase this to around 45 per cent in the third quarter, but warned that the plans “remain uncertain”, and are “subject to ongoing review”.

CEO Luis Gallego said that member carrier Iberia and Vueling “were the best performers within the group in the second quarter reflecting stronger Latin American and Spanish domestic markets driven by fewer travel restrictions”.

But IAG said that Aer Lingus capacity “continued to be severely limited by the stringent restrictions put in place by the Irish government, with passenger load factors averaging only 20 per cent” during the second quarter.

Gallego welcomed the recent removal of quarantine for fully jabbed EU and US arrivals into England and Scotland, calling it “an important first step in fully re-opening the transatlantic travel corridor”.

Travel industry reacts to removal of quarantine for fully jabbed EU and US arrivals

“All our airlines continue to take significant actions to preserve their strength through the current pandemic and to position them for recovery,” said Gallego.

“We continue to build resilience by preserving cash, boosting liquidity and reducing our cost base. At 30 June, the Group’s liquidity was €10.2 billion with a significant improvement in operating cash flow compared to previous quarters.

“Longer term we’re preparing our business so that we can emerge stronger and more competitive in a structurally changed industry. For example, we’re accelerating the digitalisation of our business and our agreements with unions are enabling us to improve productivity and reduce our cost base while increasing the proportion of variable costs.

“We remain resolute in our climate commitments. Recently, British Airways successfully raised $785 million through an EETC financing linked to the airline’s sustainability targets.

“We have also been upgraded by the CDP (Carbon Disclosure Project) to A- in recognition of our comprehensive carbon management strategy. IAG is the only European airline group that has been awarded this high grade.”

The group continues to forecast that it will take until at least 2023 for flight activity to return to 2019 levels.