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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  International Consolidated Airlines Group, SA    IAG   ES0177542018

INTERNATIONAL CONSOLIDATED AIRLINES GROU

(IAG)
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Delayed Quote. Delayed London Stock Exchange - 06/05 11:39:37 am
327.5 GBX   +13.64%
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European airlines resist mounting coronavirus refund claims

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03/27/2020 | 05:04pm EDT
FILE PHOTO: An Air France Boeing 777 aircraft takes off at Paris Charles de Gaulle airport, following the coronavirus disease (COVID-19) outbreak, in Roissy-en-France

European airlines waiting in line for coronavirus bailouts want to tap another source of interest-free loans: their customers.

Cash-strapped carriers are seeking to suspend European Union rules requiring refunds for cancellations and instead issue vouchers to clients left out of pocket as hundreds of thousands of flights are grounded by the pandemic.

Refund claims, if honoured, would be a big additional cash drain on many airlines already in need of government aid to survive a sustained travel slump.

Consumer organisations say some major airlines are already flouting the refund rules and condemn what they describe as an attempt to force consumers to lend them cash.

"We've been absolutely inundated with passengers complaining they can't get a refund from their airlines," Rory Boland of British consumer group Which? said on Friday.

The European Commission has rejected industry calls to relax the requirement in EU regulations to refund cancellations within a week, but the airlines say they are unable to comply.

"Faced with a cashflow catastrophe, many airlines can only offer vouchers in lieu of immediate cash refunds for cancelled flights," their lobby group Airlines for Europe (A4E) said.

A prolonged shutdown would make about 3.5 billion euros ($3.90 billion) of Lufthansa revenue eligible for refund in the second quarter, Citi estimates - ahead of the 3 billion euros at British Airways parent IAG or Air France-KLM, 770 million euros at easyJet and 760 million at Ryanair.

"Basically, we are trying to push as many vouchers as possible, and not allow for cancellations just to be refunded immediately," Lufthansa's finance chief, Ulrik Svensson, told investors last week.

A Lufthansa spokesman said on Friday that refunds remain "possible in principle," but not "within the usual time limits."

EasyJet and British Airways are among airlines that have made it harder to obtain refunds, by disabling them online and offering only vouchers. Twitter on Friday was aflame with customers who had been referred to swamped call centres.

BA and easyJet said cash reimbursements remained available through their contact centres.

Air France-KLM, which like Lufthansa has grounded the vast majority of its flights, is telling clients it no longer offers the immediate refunds required under European law.

Instead it is issuing a customer credit valid for one year that can be refunded only at the end of that period.

"Air France recognises clients would normally receive immediate reimbursement," its website says, blaming exceptional circumstances and "a very high number of refund requests."

Airlines are now asking European authorities to waive refund requirements on condition that vouchers are reimbursable after a minimum of 12 months, an A4E spokeswoman said.

The EU has already relaxed airport slot rules and passenger compensation and will offer airlines more help, Transport Commissioner Adina Valean told Reuters. "But people have to receive their money back if that is what they want."

Consumer groups remain unmoved by the industry's pleas.

"It isn't fair to people who have been left out-of-pocket and may be in financial difficulties themselves," said Boland at Which? - who cited the example of a family denied a refund on their annual holiday booking to Florida.

"The airlines should not be asking to keep that family's 2,000 pounds ($2,480)," he said.

Citi analyst Mark Manduca said airlines must do everything they can to ensure that "fees and taxes and anything that involves complaint money can be held to an absolute minimum during this tough time."

But he added: "As a voucher holder, you end up effectively becoming an unsecured creditor of an airline."

By Laurence Frost

Stocks mentioned in the article
ChangeLast1st jan.
AIR FRANCE-KLM 12.48% 5.568 Real-time Quote.-50.12%
DEUTSCHE LUFTHANSA AG 5.48% 10.87 Delayed Quote.-37.20%
EASYJET PLC 6.99% 891.2 Delayed Quote.-41.52%
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, SA 13.64% 327.5 Delayed Quote.-53.89%
RYANAIR HOLDINGS PLC 0.70% 12.93 Delayed Quote.-12.24%
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Financials
Sales 2020 13 029 M 14 706 M 14 706 M
Net income 2020 -3 309 M -3 735 M -3 735 M
Net Debt 2020 13 546 M 15 290 M 15 290 M
P/E ratio 2020 -1,63x
Yield 2020 -
Capitalization 6 505 M 8 273 M 7 342 M
EV / Sales 2019
EV / Sales 2020 1,54x
Nbr of Employees 64 642
Free-Float 74,3%
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Mean consensus BUY
Number of Analysts 18
Average target price 3,97 €
Last Close Price 3,28 €
Spread / Highest target 61,2%
Spread / Average Target 21,4%
Spread / Lowest Target -32,1%
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Managers
NameTitle
William Matthew Walsh Chief Executive Officer & Director
Antonio Vázquez Romero Chairman
Stephen William Lawrence Gunning Chief Financial Officer & Executive Director
John Gibbs Chief Information Officer
Kieran C. Poynter Independent Non-Executive Director
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