LONDON (Reuters) - British Airways owner IAG (LON:ICAG) expects to return to profit from the second quarter of this year as it restores flights closer to pre-pandemic levels, after reporting a multibillion-dollar loss for the second straight year.
The group, which also owns Aer Lingus, Iberia and Vueling, said on Friday it expected passenger capacity to reach 85% of pre-pandemic levels this year, following a collapse to just 36% of 2019 levels last year.
That led to a 2.97 billion euro ($3.33 billion) net loss, versus a 4.39 billion euro loss in 2020.
IAG, which said it was now avoiding Russia's airspace following the invasion of Ukraine, forecast a "significant" operating loss for the first quarter of 2022 due to normal seasonality, the impact of the Omicron coronavirus wave on near-term bookings and the cost of re-building capacity.
But, it expects operating profits from the second quarter, leading both that measure and net cash flows from operating activities to be "significantly positive" for the year.
It said Omicron had affected bookings in January and February, but had had a minimal impact on bookings for Easter and summer 2022.
"We are confident that a strong recovery is underway," said Chief Executive Luis Gallego.
The group's forecast assumes no further setbacks related to COVID-19 and government-imposed travel restrictions or material impact from "recent geopolitical developments" which it is monitoring closely.
Shares in IAG are down 19% over the last year. They fell 6% on Thursday after Russia's invasion of Ukraine caused oil prices to jump, with Brent rising above $105 a barrel for the first time since 2014 on fears of disruptions to global energy supply.
Also, without access to Russia's airways, experts say airlines face having to divert flights south while avoiding areas of tension in the Middle East - adding significant cost at a time when they are still reeling from the pandemic.
The stock was up 2.4% at 0824 GMT.
IAG, which operates 533 aircraft between 279 destinations, has been slower than some of its peers to recover, due to its exposure to the slow-to-open British market, the long-shut UK-U.S. route and smaller cargo division.
Passenger capacity in the fourth quarter was 58% of 2019 levels, up from 43% in the third.
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