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* New CEO Luis Gallego presents first quarterly results
* Says sticking to predecessor's restructuring plan
* Warns France, Germany lockdowns will further depress
travel
* Shares up 1%
(Adds CEO, analyst comments, share price)
By Sarah Young
LONDON, Oct 30 (Reuters) - The new boss of British
Airways-owner IAG warned he may have to strip even more
costs from the business as a second wave of COVID-19 leaves its
airlines staring at a bleak winter with very little travel.
Forecasting fourth-quarter capacity at just 30% of 2019
levels, IAG also stepped up its demand for governments to adopt
pre-departure testing to allow quarantine-free travel as Europe
locks down once again.
"Talking about my priorities, I think first of all we need
to continue with the restructuring process that we have in
place, we need to continue reducing our cost base," Luis Gallego
told reporters as he hosted his first quarterly results.
IAG said it had cut cash operating costs by 54% from
original plans to 205 million euros ($242 million) per week
during July-September, a vital move ahead of a winter with very
low travel.
Gallego said he was looking to make more of IAG's costs
variable, rather than fixed, which could mean, for example, more
flexible working contracts for staff.
He is being forced to act after France and Germany imposed
new blanket lockdown measures. Any similar moves in Britain and
Spain, IAG's key markets, would spell further trouble for the
group's prospects.
"What we see is where we have lockdown, we have a direct
impact in the number of bookings and revenue intake," Gallego
said.
Air France-KLM also warned of a further collapse
in traffic due to the lockdowns as it reported a 1.05 billion
euro loss on Friday.
Shares in IAG, which have lost 78% of their value this year,
were up 1% at 92 pence at 0915 GMT.
Gallego said that where routes opened IAG saw pent up demand
for travel and it continued to work with UK and U.S. authorities
on a plan to allow testing to replace quarantine between London
and New York.
The CEO took over from Willie Walsh in September after the
company secured shareholder backing for a 2.74 billion euro
capital hike to boost its finances.
Bernstein analyst Daniel Roeska said more action on costs
was needed.
"Management will need to significantly lower monthly cash
burn to avoid significantly depleting resources by next summer,"
he said.
IAG, which also owns Iberia, Aer Lingus and Vueling, was
publishing further details on its third quarter after it
announced a worse than expected quarterly loss of 1.3 billion
euros last week.
It said the total operating loss for the quarter was 1.9
billion euros, including exceptional items relating to fuel
hedges and restructuring costs at British Airways (BA) and Aer
Lingus. Staff numbers have already been cut by 10,000 at the two
airlines, with most of the reductions at BA.
($1 = 0.8461 euros)
(Reporting by Sarah Young; editing by Kate Holton and Mark
Potter)
