Europe: big 3 legacy airlines' 1Q written off, now over to governments

Premium Analysis

All three of Europe's big legacy airline groups - IAG, Air France-KLM and Lufthansa - have reported 1Q2021 results. As expected, they all made heavy losses as capacity cuts served to reduce revenues more than costs.

The main short term focus remains available liquidity, where IAG is best placed, with the highest liquidity as a percentage of 2019 revenue. Nevertheless, it is launching a convertible bond issue, and new equity issues cannot be ruled out for Air France-KLM and Lufthansa.

Air France-KLM operated the highest percentage of 2019 ASKs in 1Q2021 and has the most ambitious 2Q2021 capacity plan, aiming for 50% of 2019 ASKs.

For all, the 2021 outlook depends on progress with vaccination programmes and the relaxation of travel restrictions. More than the 1Q2021 numbers, the most important part of the IAG results presentation was CEO Luis Gallego's urging of government action to enable the restart.

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