IAG chief executive Willie Walsh will step down in September as the British Airways and Iberia parent aims for a “meaningful” return of services in July.

Walsh, who has led the group since is inception, was originally due to step down in March but delayed the move as the coronavirus crisis struck. The group today says Walsh will now be succeeded by Iberia boss Luis Gallego on 24 September.

While by that point the group hopes to have resumed a significant portion of services, it warns losses will deepen in the second quarter and group-wide restructuring will be required as it does not see passenger levels returning to current levels before 2023. As part of that, IAG expects to defer 68 aircraft deliveries.

IAG today posted a €535 million ($578 million) operating loss before exceptional items in the first quarter - compared to a €135 million profit for the same period last year. That loss spirals to €1.86 billion when exceptional items relating to fuel and foreign currency hedges are included.

“The operating result up to the end of February was in line with a year ago,” says Walsh. ”However, March’s performance was severely affected by government travel restrictions due to the rapid spread of Covid-19 which significantly impacted demand. Most of the loss in the quarter occurred in the last two weeks of March.”

The group reiterates its guidance of late April that it expects second quarter operating losses before exceptional items to be significantly worse than in the first quarter.

Passenger capacity has been cut by 94% since late March across the group, which also includes Aer Lingus and Vueling.

“We are planning for a meaningful return to service in July 2020 at the earliest, depending on the easing of lockdowns and travel restrictions around the world,” he adds. It projects this could result in an overall reduction in passenger capacity of around 50% for 2020, but says these plans are ”highly uncertain”.

“However, we do not expect passenger demand to recover to the level of 2019 before 2023 at the earliest. This means group-wide restructuring is essential in order to get through the crisis and preserve an adequate level of liquidity,” Walsh adds. “We intend to come out of the crisis as a stronger group.”

British Airways has already begun consulting on a restructuring programme which it warns could result in up to 12,000 job losses.