European airline group IAG expects to operate around 25% of pre-crisis capacity in the second quarter of this year amid the continued impact of Covid-19 travel restrictions.

Reporting its first-quarter performance on 7 May, the British Airways and Iberia parent cites uncertainty regarding the future path of the pandemic, noting that it flew just 19.6% of 2019 capacity and 21.9% of 2020 capacity during the January-March period this year.

The minor uptick in second-quarter capacity projections – which IAG says is subject to review – comes as the group reiterates its belief that it will take until at least 2023 for passenger demand to reach 2019 levels.

“We’re taking all necessary actions to ensure the financial health of our business for the long-term, including last year’s successful €2.7 billion capital increase, and remain focused on reducing our cost base and increasing efficiencies,” says IAG chief executive Luis Gallego.

The group increased its liquidity to €10.5 billion ($12.7 billion) at the end of the first quarter, from €10.3 billion at the end of 2020, “driven by successful conclusion of financing“ alongside cost actions the deferral of UK pension contributions, it says.

It has a “reasonable expectation” that liquidity is sufficient “for the foreseeable future”, but does not rule out the potential need to secure further funding, should the outlook worsen beyond current predictions.

IAG revealed an operating loss before exceptional items of €1.14 billion for the January-March quarter, compared with a loss of €535 million for the same period of 2020, when the first effects of the coronavirus crisis were felt.

Total revenue of €968 million was down 78.9% year-on-year, while net debt of €11.6 billion was 19% higher.

Gallego notes that cargo has “enabled us to operate a more extensive passenger long-haul network”, with 1,306 freight-only flights during the first quarter generating revenue of €350 million.

IAG has announced changes to its fuel-hedging policy to allow for differentiation between airlines and to better handle any “significant unexpected reductions in travel demand or capacity” as well as any “sudden changes in jet fuel prices”, such as those seen during the coronavirus crisis.