UPDATE 2-British Airways-owner IAG cautious on short term flying recovery

* Q1 loss of 1.14 bln euros vs 1.17 bln euro loss consensus

* Weekly cash burn reduced to 175 mln euros, better than
guidance

* Sees Q2 capacity at 25% of 2019 capacity, up from 19.6% in
Q1
(Adds background, detail)

By Sarah Young

LONDON, May 7 (Reuters) - British Airways-owner IAG
on Friday forecast only a minimal pick-up in capacity to 25% for
the April to June quarter, remaining cautious despite hopes that
European travel will start to recover from late May onwards.

The rise to 25% of 2019's capacity puts IAG's plans behind
those of competitor airlines, and compares to the 19.6% of
capacity that it flew in the January to March quarter as the
coronavirus pandemic continued to restrict travel.

IAG chief executive Luis Gallego said in a statement the
airline was "ready to fly but government action is needed".

He called for travel corridors to open between countries
with high vaccination rates, such as the United Kingdom and the
United States.

Britain is set to publish later on Friday its "green list"
of low risk places where people can travel from May 17 without
needing to quarantine on their return home, but reports suggest
that just a handful of countries will make the list.

IAG's capacity plans put it behind Air France-KLM,
which said on Thursday it expects to operate 50% of its
pre-pandemic flight capacity in the second quarter. Lufthansa
last week cut its capacity to forecast to about 40% of its
pre-pandemic capacity for 2021.
European airlines hope that by July, much of the continent
will be open for travel, meaning bookings will rise and they can
ramp up capacity to start repairing their COVID-19 battered
finances.

Minimal flying in the January to March quarter, resulted in
IAG posting an operating loss before exceptional items of 1.14
billion euros, slightly better than the 1.17 billion euro loss
forecast by analysts.

IAG, which also owns Iberia and Vueling in Spain and Aer
Lingus in Ireland, said it reduced weekly cash burn to 175
million euros, a better performance than the 185 million euros a
week it had previously guided for the period.

The group also said it had strong liquidity of 10.5 billion
euros at the end of the first quarter. Given the ongoing
uncertainty over COVID-19, IAG said it could not provide profit
guidance for 2021.
(Reporting by Sarah Young, Editing by Paul Sandle and Michael
Holden)