Chaos at Heathrow and Gatwick knocks £360m off the value of British Airways owner
Companies: International Consolidated Airlines Group SA
Shares in IAG fell more than 3% on Tuesday, wiping nearly £360m off the Group's market cap, after a chaotic weekend of disruption saw hundreds of BA flights cancelled or delayed at the UK's two largest airports.
IT systems failed across the company, causing lengthy delays and disruption to holidaymakers at Gatwick and Heathrow, which is likely to cost the company an estimated £100m in compensation claims.
There are also likely to be longer term impacts on brand confidence at the airliner, which has been aggressively cutting costs by laying off staff and outsourcing IT systems to third parties.
BA CEO Alex Cruz said he was “profusely apologetic” for the failure, but reiterated that it had nothing to do with cost savings and confirmed he would not be resigning.
Despite today's share price fall, the company has made impressive gains in the past 12 months, rising 56% since July 2016 and trading near its all-time highs before this weekend.
The dual-listed group is currently trading at a forward P/E of 7.3x earnings, significantly lower than the sector average of 13x and below peers EasyJet and Ryanair both trading at 15x earnings.
