The parent of British Airways said this morning it expects a “significant” quarterly operating loss for the first quarter of this year.
But International Airlines Group (IAG) anticipates moving back into profitability in the second quarter if it is not hit by further pandemic problems or impacted by the Russian invasion of Ukraine.
Chief executive Luis Gallego said the losses for Q1 were due to normal seasonality, the impact of Omicron on near-term bookings and the impact on operating costs of rebuilding capacity.
He added: “IAG expects its operating result to be profitable from Q2 - leading both operating profit and net cash flows from operating activities to be significantly positive for the year.”
But the CEO said this financial forecast assumes no further setbacks related to Covid-19 and government-imposed travel restrictions or material impact from recent geopolitical developments.
IAG has reported losses for 2021 after tax of £2.45billion, compared to losses of nearly £5.8billion the year before.
Mr Gallego said: “We are confident that a strong recovery is underway. Our teams across the group are taking every opportunity to develop our business while capitalising on the surge in bookings when travel restrictions are lifted.
“All our airlines continued to show improvements in the fourth quarter, optimising their performance and further improving their operating results. Our diversified business model enabled us to make the most of the recovery as individual markets were affected at different times and in different ways.
"Premium leisure has performed strongly at both British Airways and Iberia, while business travel has started to recover especially on the transatlantic routes.
“Bookings have remained strong for easter and summer 2022, having picked up in the new year. We expect a robust summer with IAG returning to around 85% of its 2019 capacity for the full year.”
FTSE 100
The UK's top share index, the FTSE 100, suffered a massive fall on Thursday after Russia's invasion of Ukraine - closing down nearly 4%, or 291 points, at 7,207. It was its biggest one-day drop since June 2020.
But the index made a brighter start this morning, up 57 points to 7,265.
International markets
Leading US stock markets ended sharply higher on Thursday in a dramatic market reversal after President Joe Biden unveiled harsh new sanctions against Russia.
The S&P 500 rose by 1.5% to 4,288 - ending a four-day slide amid worries over the escalating crisis.
The Nasdaq was 3.34% ahead at 13,473 while the Dow Jones edged ahead by 0.28% to 33,223.
All three major indices had been sold off early in the day on news of Russia's invasion of Ukraine.
Peter Cardillo, chief market economist at Spartan Capital Securities in New York, told Reuters: "The tough stand the US and Europe is taking is sending a loud message to the financial markets that they're going to try to cripple as much as they can the Russian economy.
"From one perspective that's positive," he said, adding that the selling in the market may not be over. "Going forward, we're still subject to probably higher oil prices, probably higher commodity prices."
Shares on the Moscow stock market lost a third of their value in one of the worst collapses in history on Thursday, while Russia's central bank scrambled to rescue the rouble after it sunk to record lows.
Investors rushed for the exit on Russian markets as around £150billion was wiped off its stocks.
The Bank of Russia also moved to stabilise the rouble after it plunged as much as 10%.
Companies reporting today
Finals: International Airlines Group, Pearson, Rightmove
Trading update: Babcock International