The group said the spread of the infection and subsequent state travel restrictions and advisories was having a “significant and increasingly negative” on demand across “almost all routes” operated by IAG group airlines.
IAG on Monday (16 March) outlined a wide range of cost-saving measures, including grounding surplus aircraft, freezing recruitment and encouraging voluntary leave.
In a trading update, the group said its finances were healthy, stating its total liquidity amounted to €9.3 billion. However, citing the ongoing uncertainty and potential impact of Covid-19, it was no longer possible to give any accurate profit guidance for the full year.
“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,” said IAG chief executive Willie Walsh.
“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.”
IAG has already suspended flights to China, reduced capacity on Asian routes, cancelled all flights to, from and within Italy, and made other changes to its group route network.
On other impacted destinations, IAG said: “The US presidential announcement to restrict entry of foreign nationals who have been in countries in the Schengen area, the UK and Ireland, has added to the uncertainty on north Atlantic routes.
“In addition, many other countries have banned or are restricting inward travel, including Argentina, Chile, India and Peru. Spain has also been the subject of travel advisories, for example by the Foreign Office (FCO).”
First-quarter capacity, in terms of available seat kilometres, is expected to come in down around 7.5% on last year, and during April and May, the group plans to reduce capacity by at least 75% compared with the same period in 2019.
Measures to reduce operating expenses and improve cash flow, meanwhile, include 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.
