LONDON, United Kingdom (AFP) — IAG, owner of British Airways and other European airlines, said last Friday it plunged into a record annual net loss of 6.9 billion euros (US$8.4 billion) as the coronavirus pandemic paralysed air travel.

IAG, which also owns Spanish airline Iberia and Ireland’s Aer Lingus, said last year’s huge loss after tax compared with a net profit of 1.7 billion euros in 2019.

Revenues dived almost 70 per cent to 7.8 billion euros in 2020 as government travel restrictions slashed passenger numbers.

IAG said there had been an upturn in bookings since London outlined a four-month plan last week to ease England’s current lockdown and the company’s shares rebounded.

“Our results reflect the serious impact that COVID-19 has had on our business,” said chief executive Luis Gallego.

Owing to the fallout, IAG has axed around 10,000 jobs at British Airways or one quarter of the carrier’s workforce and has cut 500 positions at Aer Lingus.

“We have taken effective action to preserve cash, boost liquidity and reduce our cost base. Despite this crisis, our liquidity remains strong,” Gallego said.

The group’s bottom line was also impacted heavily by restructuring costs and losses incurred on aircraft and other assets as a result of the pandemic.

Additionally, there were exceptional charges for jet fuel and foreign currency hedging contracts which turned sour.

Airlines seek to bet against volatile oil and currency market swings by taking defensive positions on futures markets. If they get the market direction wrong, it can turn out costly.

Gallego said IAG had experienced a “big increase” in demand since the Government announced plans last week to ease England’s current coronavirus lockdown amid a rapid vaccination drive.

“We know there is pent-up demand for travel and people want to fly,” Gallego said.

“Vaccinations are progressing well and global infections are going in the right direction.

“We’re calling for international common testing standards and the introduction of digital health passes to reopen our skies safely,” he added.

Despite the record loss, IAG shares jumped 5.5 per cent to 196.65 pence in mid-morning deals on London’s FTSE 100 index, which was down 0.4 per cent overall.

“One could argue that the worst times could soon be over, particularly as people are starting to think about booking holidays again,” noted AJ Bell investment director Russ Mould.

“IAG is naturally reluctant to issue any earnings guidance for the new financial year, but one cannot help feeling there are grounds to be optimistic about it having significantly more planes in the sky in six to nine months’ time.”