Riad Salameh: In Lebanon, depositors’ money is still available

Riad Salameh: In Lebanon, depositors’ money is still available
Riad Salameh told Arab News en Français he was in favor of the audit of the Banque du Liban (BDL) by experts from the Bank of France. (AFP/File)
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Updated 25 August 2020

Riad Salameh: In Lebanon, depositors’ money is still available

Riad Salameh: In Lebanon, depositors’ money is still available
  • Central Bank chief says he supports IMF involvement in Lebanon, Macron’s proposal for audit of BDL by Bank of France experts
  • Governor working on other means of financing, reassures depositors they ‘will get their money back, even if it takes time’

Riad Salameh has long been perceived as the strongman of Lebanon, the guardian of an economic model that has been the envy of many throughout the region. A skilled financier, he guaranteed the stability of the Lebanese pound for nearly 30 years and was awarded by the largest financial institutions. The banker saw his life change, however, with the October 2019 uprising and the economic collapse, which have mired the Land of the Cedars in turmoil.

Since then, Salameh has come under fire. He is accused of having misused the money of Lebanon’s citizens by granting funds to the government, which have been wrongly managed by a political class corrupt to the bone.      

Bank of France experts  

In an exclusive interview with Arab News en Français, Salameh defended himself against these accusations, which he considers “unfair.” He claims to be in favor of the audit of the Banque du Liban (BDL) by experts from the Bank of France in order to advance negotiations with the International Monetary Fund (IMF). The audit was proposed by French President Emmanuel Macron, who is visiting Lebanon after the explosion at the port of Beirut on Aug. 4.  

“An audit of the BDL, going back to 1993, was conducted by two international firms,” recalls Salameh. “The latest reports of this audit were sent to the IMF at the beginning of the negotiations. It is therefore important to acknowledge that this international audit exists, to dismiss any doubts about the way the BDL is managed. We welcome the proposal of the Bank of France to audit the BDL. The decision is the responsibility of the Bank of France, but we are ready to welcome their experts at their convenience.”  

On April 30, the government announced an economic recovery plan and requested assistance from the IMF, from which Beirut hopes to secure about $10 billion in aid. Lebanon initiated negotiations with the fund, but nearly three months later, the process stalled.

Opinion

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While he admits that Lebanon must negotiate with the IMF, Salameh stresses that he is in favor of “an IMF involvement in Lebanon, even though some have claimed otherwise.” During the negotiations, however, a parliamentary committee and the government diverged on the estimations of the public deficits, those of the Central Bank and those of the banks: from 60,000 to 241 trillion Lebanese pounds (i.e. tens of billions of dollars). The IMF then required a unified assessment.

“The approach we have adopted is different from the government’s plan,” says Salameh. “The differences stem mainly from the fact that, in our approach, we did not consider that we should have reductions in the debt in Lebanese pounds. We also did not take into account differences in the exchange rate. As a matter of fact, half of the losses attributed to the Central Bank in the government plan stem from the fact that the Cabinet varies the price of the dollar from 1,500 pounds to a dollar to 3,500. It is this loss that we have not taken into account. The differences are therefore due to the initial assumptions, not to mention differences regarding non-performing debts.  

“Our goal was to reduce losses while remaining transparent, but it was mainly about reducing the constraints that the Lebanese have to endure because of the reforms undertaken in light of the current crisis,” he says.  

Asked why the IMF did not accept the BDL figures, Salameh said: “The fund has its own principles and concepts. But it is up to the Lebanese to negotiate now because the real goal is to be able to find a way out of the crisis which, for Lebanon, means international support, essentially. And the latter will not take place without the support of the IMF or a political agreement.”

Slow-coming reforms  

Amid the grave economic crisis, the country has been experiencing an unprecedented depreciation of its currency for several months, as well as soaring prices, large-scale layoffs and draconian banking restrictions on withdrawals and transfers abroad.    

Deemed incompetent and corrupt and accused of having “lent” depositors’ money to the government, Salameh defended himself, claiming that the central bank “did not take the depositors’ money.”

“It must be clear that the BDL has essentially given loans in Lebanese pounds, which is a currency that the Central Bank issues itself.  

“It is not realistic to empower the Central Bank as a conduit between depositors, banks and the government. We have the capacity to print Lebanese banknotes, so there is no need to use the banks’ money. As a reminder, most of the debt we owe to the government is in Lebanese pounds. You will ask me then where the country’s foreign exchange reserves were used ... Over the past five years, the current account has had a cumulative deficit of $56 billion, and the budget deficit was $25 billion. This total amount of $81 billion is Lebanon’s financial gap. It is not linked to the Central Bank at all, but rather comes from the government’s import and deficit figures,” Salameh continued.  




Salameh and the Central Bank have been the target of anti-government protesters as Lebanon's economy collapsed in recent years. (AFP/File)

As for the question of why the governor continued to reassure the Lebanese people and did not instead alert the government to the danger of the deficit, given that he was in control of the country’s finances, Salameh answered: “At the central bank, everything was in order. Personally, I have always called for reforms and deficit reduction in all my speeches — some of which were with you actually. I declared that we were in control of the monetary situation, but I have never given reassurances regarding the state of the public finances. I have reiterated and stressed the need for reforms to preserve monetary stability. At the Paris I, II, and III conferences, as well as at the Cedar conference, I demanded that there be reforms.” 

Although the Lebanese government adopted its economic bailout at the end of April to boost growth and clean up public finances, reforms, particularly in the electricity sector, are struggling to materialize.  

In this regard, Salameh pointed out that the Central Bank has lent money to the government “by legal obligation.”

He said: “It’s not like we went to place investments with the Lebanese government. Article 91 of the Currency and Credit Code obliges the Central Bank to finance the government when the latter requests it. In the budgets voted by parliament in 2018, we were requested to lend $6 billion in Lebanese pounds, at an interest rate 1 percent lower than the usual adopted interest rates. In 2019, another law was enacted for the BDL to lend $3.5 billion in Lebanese pounds at 1 percent interest rate. As for the 2020 budget, a law has requested us to repay the interest we receive on the portfolio we have with the state, and also to repay a trillion Lebanese pounds. In other words, $3 billion. It is not really fair to say that the Central Bank and its governor painted a rosy picture for the Lebanese people. I wonder if there are no bad intentions behind this image they are trying to give of us.” 

While he accuses those in power of having such “bad intentions” toward him, Salameh believes that this may be motivated by “local politics, ideological reasons, or opportunism,” but says that “falsifying realities in recent months” has really “surprised” him. 

Regarding the criticisms leveled against him for having based his financial strategy on a gigantic “Ponzi scheme,” with financial engineering and loans that were costly for Lebanon, Salameh replied: “When you look at the transactions carried out between the banks and the Central Bank, and at the figures between 2017 and June 2020, you will see that the Central Bank has issued foreign currency liquidity to the market and banks in addition to collecting money from banks. You will be surprised to find that we injected much more money than we took out: 11.5 billion.” 

‘The depositors’ money is here’ 

How, then, does Salameh explain the fact that banks have run out of money? “This money went into the trade balance deficit. Ponzi would not be proud of us because, in principle, it is the Central Bank that should have benefited if there were really a Ponzi scheme in place,” he explained. 

He added: “There have been back-to-back shocks that put pressure on banks, creating panic among depositors, including the closure of banks in October for a month at the beginning of the protests. This turned the Lebanese economy into a ‘cash economy.’ People lost faith in the system. Then came the government’s declaration that the country was unable to repay the maturities of its national debt on Eurobonds. I was personally against this and expressed as much officially.” 

On March 7, Lebanon, which is currently crumbling under a debt of $92 billion (170 percent of its gross domestic product), defaulted on a first installment of its debt, amounting to $1.2 billion. On March 23, Lebanon also announced that it would not be paying all of its treasury bills issued in dollars. 

Salameh said: “This unfortunately prevented Lebanon from gaining access to international markets and international bank credits, which paralyzed us. Then came the effects of the COVID-19 pandemic and the port explosion. The system is still holding up amid all of this. The depositors’ money is here. Depositors are gradually withdrawing it, investing in real estate, and getting loans. The only problem lies in international transfers, and these will be resolved once the reforms are implemented and confidence is restored. We discussed the goal of the government’s plan. We are against haircutting depositors. We intend to give depositors their money back. It may take a while, but they will get it back. Many depositors have already invested in real estate to maintain the value of their deposits.” 

However, many Lebanese complain that the haircut is applied de facto, since dollar depositors can only withdraw a limited amount of their money in Lebanese pounds, at the rate of 3,800 pounds to the dollar, while the black-market rate currently hovers around 8,000 Lebanese pounds to the dollar. 

“The market and the demand decide that,” said the governor. “There is no law that takes money away from people, and that difference is critical. Today, we certainly have different prices for the dollar, but the official rate as well as the rate charged for imports and that of the black market vary because we have become a cash economy. There is evident pressure amid all these events. The Aug. 4 explosion destroyed many homes, and people are in need of cash, especially since merchants only accept cash. But there is no law that says this. What the market decides is different from what the legislator does.” 

He continued: “Today, the Cabinet is thinking of creating a fund to bring together real estate and give currency certificates to the Central Bank from this fund, which will be able to reduce losses without increasing debt and maybe create the necessary symmetry to execute the plan. The idea is still recent; the minister of finance has just introduced it.” 

Heading toward the end of subsidies? 

A few days ago, an official source at the Central Bank revealed to Reuters that the BDL would only be able to provide subsidies on fuel, medicine and wheat for three months, a statement the governor confirmed. 

“The BDL is doing its best, but it cannot use the reserve requirements of banks to finance trade,” he said. “Once we reach the threshold of these reserves, we will be forced to stop funding. Nevertheless, we are in the process of creating other means of financing, whether through banks or through a fund that we have set up abroad, called ‘Oxygen.’ However, the BDL is not the government, and it is the government that must take action. The Central Bank cannot be held accountable for everything and then be blamed for what it does afterwards. We have laid out the situation well in advance. Let those responsible take the necessary measures.” 

Asked about the colossal amounts pulled out of Lebanon by bankers and politicians before Oct. 17 and about the possibility of retracing their course, the governor said: “We will soon issue a circular to hold these depositors accountable and encourage them to bring significant liquidity back to the country without confiscating their money. Today, it is a matter of ethics — not a legal one — because it is a system that has benefited everyone. The BDL must empower these depositors who can restore liquidity in the banking sector by refinancing the country through external deposits.” 

Lastly, accused by some of having taken advantage of the system for his personal enrichment, Salameh replied that he made a good living well before becoming governor of the BDL, with a salary of $165,000 per month at the Merrill Lynch bank. “I showed all the documents on television. I arrived at the BDL with a fortune of $23 million, which was invested and which produced results. I am accused of having siphoned off billions. My answer is clear: Since I can validate the source of my fortune, it is enough to prove that I am not abusing my position. In fact, I have sued those who have defamed me.” 

Is the end of the crisis near? “It is primarily political,” said Salameh. “It is mainly regional tensions that have gained the upper hand in Lebanon, and international support is needed to create liquidity in the country. I have no doubt that the Lebanese people will be able to manage afterwards.” 


SoftBank says deal reached with WeWork founder, directors

SoftBank says deal reached with WeWork founder, directors
Updated 36 min 53 sec ago

SoftBank says deal reached with WeWork founder, directors

SoftBank says deal reached with WeWork founder, directors
TOKYO: SoftBank Group Corp. has reached a settlement in a US legal dispute with directors of office space-sharing venture WeWork Inc. and its founder Adam Neumann, the Japanese technology company said Saturday.
The terms of the settlement in the Delaware Court of Chancery were not disclosed. The statement said the agreement was not yet final. Other details were not immediately available.
The wrangling began more than a year ago after SoftBank acquired shares in WeWork, which was suffering after its failed IPO. But some investors and Neumann were not satisfied with the monetary deals offered by SoftBank.
“With this litigation behind us, we are fully focused on our mission to reimagine the workplace and continue to meet the growing demand for flexible space around the world,” said Marcelo Claure, executive chairman of WeWork and SoftBank Group International chief executive.
Tokyo-based SoftBank is a majority shareholder in WeWork, whose bumpy results, especially amid the coronavirus pandemic, has dented SoftBank’s financial results.
SoftBank says WeWork holds potential, especially in markets like Japan, where office space is costly and workers’ commutes tend to be long. SoftBank also invests in artificial intelligence, Internet services, sustainable energy and IoT.

Investors weigh new stock leadership as broader market wobbles

Investors weigh new stock leadership as broader market wobbles
Updated 31 min 29 sec ago

Investors weigh new stock leadership as broader market wobbles

Investors weigh new stock leadership as broader market wobbles
  • Tech and momentum stocks helped drive returns in 2020 “when everyone was locked down and all they had was their computer”

NEW YORK: A shakeup in stocks accelerated by the past week’s surge in Treasury yields has investors weighing how far a recent leadership rotation in the US equity market can run, and its implications for the broader S&P 500 index.
Moves this week further spurred a shift that has seen months-long outperformance for energy, financial and other shares expected to benefit from an economic recovery, while a climb in Treasury yields weighed on the technology stocks that have led markets higher for years.
The two-track market left the benchmark S&P 500 down for the week, and sparked questions about whether it could sustain gains going forward if the tech and growth stocks that account for the biggest weights in the index struggle.
So far this year, the S&P 500, which gives more influence to stocks with larger market values, is up 1.5 percent, while a version of the index that weights stocks equally is up 5 percent.
“That just tells us the gains are less narrow, more companies are participating, and I think that’s healthy,” said James Ragan, director of wealth management research at D.A. Davidson.
The focus on market leadership comes as investors are weighing whether the S&P 500 is due for a significant pullback after a 70 percent run since March, with the rise in long-dormant yields the latest sign of trouble for equities as it means bonds are more serious investment competition. The yield on the 10-year US Treasury note this week jumped to a one-year peak of 1.6 percent before pulling back.
Economic improvement will be in focus in the coming weeks, including the monthly US jobs report due next Friday, as will the country’s ability to ensure widespread coronavirus vaccinations, especially as new variants emerge.
Tech and momentum stocks helped drive returns in 2020 “when everyone was locked down and all they had was their computer,” said Jack Ablin, chief investment officer at Cresset Capital Management. “Now it seems with the vaccines, the stimulus and the prospect of reopening that we are looking out toward a recovery phase.”
The shift in the market this week is building on one that was fueled in early November, when Pfizer’s breakthrough COVID-19 vaccine news generated broad bets on an economic rebound in 2021.
Among the moves since that point: the S&P 500 financial and energy sectors are up 29 percent and 65 percent, respectively, against a nearly 9% rise for the benchmark index and 7 percent rise for the tech sector. The Russell 1000 value index has gained 16.5 percent against a 4.3 percent climb for its growth counterpart, while the smallcap Russell 2000 is up 34 percent.
“You definitely are seeing the reopening trade that has pretty much come alive here,” said Gary Bradshaw, portfolio manager of Hodges Capital Management.
Despite the gains, there remains “plenty of room for the reflation trade to run from a valuation perspective,” Lori Calvasina, head of US equity strategy at RBC Capital Markets, said in a report this week. RBC is “overweight” the financials, materials and energy sectors.
Rising rates tend to be favorable for more cyclical sectors, David Lefkowitz, head of Americas equities at UBS Global Wealth Management, said in a note, with financials, energy, industrials and materials showing the strongest positive correlations among sectors with 10-year Treasury yields.
Still, how long the market’s reopening trade lasts remains to be seen. Investors may be reluctant to stray from tech and growth stocks, especially with many of the companies expected to put up strong profits for years.
Any setbacks with the economy or with efforts to quell the coronavirus could revive the stay-at-home stocks that thrived for most of 2020.
And with a GameStop-fueled retail-trading frenzy taking hold this year, banks and other stocks in the reopening trade may fail to draw the same attention from amateur investors as stocks such as Tesla, said Rick Meckler, partner at Cherry Lane Investments.
“There isn’t the pizzazz to those stocks,” Meckler said. “There rarely is a potential for stocks to make the kind of moves that big tech growth stocks have made.”


IMF urges Tunisia to cut wage bill and energy subsidies

IMF urges Tunisia to cut wage bill and energy subsidies
Updated 27 February 2021

IMF urges Tunisia to cut wage bill and energy subsidies

IMF urges Tunisia to cut wage bill and energy subsidies
  • The IMF said in statement that monetary policy should focus on inflation by steering short term interest rates, while preserving exchange rate flexibility

TUNIS: The International Monetary Fund urged Tunisia on Friday to cut its wage bill and limit energy subsidies to reduce a fiscal deficit, putting more pressure on the fragile government amid a severe financial and political crisis.
With the coronavirus pandemic, political infighting and protests since last month over social inequality, it is a time of unprecedented economic hardship in the North Africa country that ran a fiscal deficit of 11.5 percent of GDP in 2020.
The IMF said in statement that monetary policy should focus on inflation by steering short term interest rates, while preserving exchange rate flexibility.
Tunisia’s 2021 budget forecasts borrowing needs $7.2 billion including about $5 billion in foreign loans. It puts debt repayments due this year at 16 billion dinars, up from 11 billion dinars in 2020.
The IMF said the service salary bill is about 17.6% of GDP, among the highest in the world.


House passes $1.9tn pandemic relief bill, sends it to Senate

House passes $1.9tn pandemic relief bill, sends it to Senate
Updated 32 min 33 sec ago

House passes $1.9tn pandemic relief bill, sends it to Senate

House passes $1.9tn pandemic relief bill, sends it to Senate
  • Final passage appeared likely after the measure cleared a procedural hurdle by a partyline vote of 219 to 210.

WASHINGTON: The House approved a $1.9 trillion pandemic relief bill early Saturday in a win for President Joe Biden, even as top Democrats tried assuring agitated progressives that they’d revive their derailed drive to boost the minimum wage.
The new president’s vision for flushing cash to individuals, businesses, states and cities battered by COVID-19 passed on a near party-line 219-212 vote. That ships the massive measure to the Senate, where Democrats seem bent on resuscitating their minimum wage push and fights could erupt over state aid and other issues.
Democrats said the still-faltering economy and the half-million American lives lost demanded quick, decisive action. GOP lawmakers, they said, were out of step with a public that polling shows largely views the bill favorably.
“I am a happy camper tonight,” Rep. Maxine Waters, D-Calif., said Friday. “This is what America needs. Republicans, you ought to be a part of this. But if you’re not, we’re going without you.”
Republicans said the bill was too expensive and said too few education dollars would be spent quickly to immediately reopen schools. They said it was laden with gifts to Democratic constituencies like labor unions and funneled money to Democratic-run states they suggested didn’t need it because their budgets had bounced back.
“To my colleagues who say this bill is bold, I say it’s bloated,” said House Minority Leader Kevin McCarthy, R-Calif. “To those who say it’s urgent, I say it’s unfocused. To those who say it’s popular, I say it is entirely partisan.”
That divide is making the fight a showdown over which party voters will reward for heaping more federal spending to combat the coronavirus and revive the economy atop the $4 trillion approved last year.
The battle is also emerging as an early test of Biden’s ability to hold together his party’s fragile congressional majorities — just 10 votes in the House and an evenly divided 50-50 Senate.
At the same time, Democrats were trying to figure out how to assuage progressives who lost their top priority in a jarring Senate setback Thursday.
That chamber’s nonpartisan parliamentarian, Elizabeth MacDonough, said Senate rules require that a federal minimum wage increase would have to be dropped from the COVID-19 bill, leaving the proposal on life support. The measure would gradually lift that minimum to $15 hourly by 2025, doubling the current $7.25 floor in effect since 2009.
Hoping to revive the effort in some form, Senate Majority Leader Chuck Schumer, D-N.Y., is considering adding a provision to the Senate version of the COVID-19 relief bill that would penalize large companies that don’t pay workers at least $15 an hour, said a senior Democratic aide who spoke on condition of anonymity to discuss internal conversations.
That was in line with ideas floated Thursday night by Sens. Bernie Sanders, I-Vermont, a chief sponsor of the $15 plan, and Senate Finance Committee Chair Ron Wyden, D-Oregon, to boost taxes on corporations that don’t hit certain minimum wage targets.
House Speaker Nancy Pelosi, D-Calif., offered encouragement, too, calling a minimum wage increase “a financial necessity for our families, a great stimulus for our economy and a moral imperative for our country.” She said the House would “absolutely” approve a final version of the relief bill because of its widespread benefits, even if it lacked progressives’ treasured goal.
While Democratic leaders were eager to signal to rank-and-file progressives and liberal voters that they would not yield on the minimum wage fight, their pathway was unclear because of GOP opposition and questions over whether they had enough Democratic support.
House Ways and Means Committee Chair Richard Neal, D-Mass., sidestepped a question on taxing companies that don’t boost pay, saying of Senate Democrats, “I hesitate to say anything until they decide on a strategy.”
Progressives were demanding that the Senate press ahead anyway on the minimum wage increase, even if it meant changing that chamber’s rules and eliminating the filibuster, a tactic that requires 60 votes for a bill to move forward.
“We’re going to have to reform the filibuster because we have to be able to deliver,” said Rep. Pramila Jayapal, D-Washington, a progressive leader.
Rep. Alexandria Ocasio-Cortez, D-N.Y., another high-profile progressive, also said Senate rules must be changed, telling reporters that when Democrats meet with their constituents, “We can’t tell them that this didn’t get done because of an unelected parliamentarian.”
Traditionalists of both parties — including Biden, who served as a senator for 36 years — have opposed eliminating filibusters because they protect parties’ interests when they are in the Senate minority. Biden said weeks ago that he didn’t expect the minimum wage increase to survive the Senate’s rules.
Pelosi, too, seemed to shy away from dismantling Senate procedures, saying, “We will seek a solution consistent with Senate rules, and we will do so soon.”
The House COVID-19 bill includes the minimum wage increase, so the real battle over its fate will occur when the Senate debates its version over the next two weeks.
The overall relief bill would provide $1,400 payments to individuals, extend emergency unemployment benefits through August and increase tax credits for children and federal subsidies for health insurance.
It also provides billions for schools and colleges, state and local governments, COVID-19 vaccines and testing, renters, food producers and struggling industries like airlines, restaurants, bars and concert venues.
Democrats are pushing the relief measure through Congress under special rules that will let them avoid a Senate GOP filibuster, meaning that if they are united they won’t need any Republican votes.
It also lets the bill move faster, a top priority for Democrats who want the bill on Biden’s desk before the most recent emergency jobless benefits end on March 14.
But those same Senate rules prohibit provisions with only an “incidental” impact on the federal budget because they are chiefly driven by other policy purposes. MacDonough decided that the minimum wage provision failed that test.
Republicans oppose the $15 minimum wage target as an expense that would hurt businesses and cost jobs.

Related


BA owner calls for COVID health passes after record $9 billion loss

BA owner calls for COVID health passes after record $9 billion loss
In this Tuesday, Jan. 10, 2017, file photo, British Airways planes are parked at Heathrow Airport in London. (AP)
Updated 27 February 2021

BA owner calls for COVID health passes after record $9 billion loss

BA owner calls for COVID health passes after record $9 billion loss
  • Tighter travel restrictions have threatened to ruin Europe's critical summer season

LONDON: British Airways owner IAG is counting on digital health passes to help spur a travel recovery this summer, after the pandemic pushed it to a record €7.4 billion ($9 billion) loss last year, when it ran just a third of normal flights.

Tighter travel restrictions over the last two months have threatened to ruin Europe’s critical summer season and leave some airlines needing more funding, analysts have warned.
But after taking on new loans, IAG said it had €10.3 billion of liquidity and was well set to ride out the crisis.
“We’ve got very strong liquidity going into 2021 ... so no, we will not need additional funding,” finance chief Steve Gunning told reporters on a call.
European airlines hope travel restrictions will soon be eased to allow them to make money again. Britain on Monday laid out plans for travel markets to possibly reopen from mid-May, prompting a flood of bookings.
IAG chief executive Luis Gallego said if the UK plans went ahead, it would be a “positive summer,” but digital health passes were needed to unlock the market.
“Health passes are going to be the key to restart the aviation and the travel,” said Gallego, who is six months into the job, calling for a digital system that could include test results and proof of vaccination.
Several countries are considering health passports to help revive travel, but are worried about risks to civil liberties. However, Britain’s Heathrow Airport warned this week that dealing with a big rise in passengers would not be possible with current paper-based checks.
IAG shares were up 4 percent at 194 pence in morning trading. They have jumped 13 percent in the last five days, after Britain’s announcement on a travel restart, but over the last 12 months have lost half their value.

Cash burn
The pandemic has already crippled airlines like Norwegian Air, and left major players such as Air France-KLM and Lufthansa relying on state support.
While a recovery is now in sight, there is still much uncertainty.
IAG, which also owns Aer Lingus, Iberia and Vueling, said it could not give profit guidance for 2021, and asked how many flights it might run this year, Gallego said: “To be honest nobody knows what’s going to happen.”
For January-March, IAG said it expected to fly about 20 percent of 2019’s capacity, compared to the whole of 2020 when it flew at 34 percent of capacity.
IAG’s focus for now is on cutting costs to reduce cash burn. Weekly cash burn fell to €185 million in the first quarter, down 30 million from the previous quarter.
Last October, IAG secured shareholder backing for a €2.74 billion capital hike and Goodbody analysts said it might have to call on investors again.
“With further losses expected this year ... another rights issue can’t be ruled out in the medium term,” they said.
IAG’s operating loss before exceptional items, its preferred measure, came in at €4.37 billion, slightly better than analysts’ consensus forecast for a 4.45 billion loss.