Aer Lingus and British Airways owner IAG has warned the travel slump from the coronavirus pandemic had deepened.

This has forced it to axe even more of its winter flying schedule as it reported a quarterly loss of €1.3 billion. 

The loss was far larger than the €920m forecast by analysts, as passenger numbers plunged and it struggled to even half-fill its planes.

This illustrated the scale of the challenge faced by IAG's new boss, Luis Gallego, who took over from Willie Walsh in September. 

As a second wave of Covid-19 infections spreads across Europe, airlines are facing a bleak winter and IAG joins Lufthansa, Ryanair and EasyJet in cutting back already anaemic schedules. 

IAG, which also operates Iberia and Vueling, said that for the fourth quarter - which includes the normally busy Christmas period - it would fly no more than 30% of the capacity it flew a year earlier.

This was lower than its previous guidance of 40%. 

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Shares in the company dropped 3% in London trade. The stock has lost 78% so far this year as the pandemic has crushed its business. 

With less flying ahead, the group warned it no longer expected to reach breakeven in terms of net cash flow from operations in the fourth quarter, but said that liquidity was strong. 

The company has raised €2.74 billion from shareholders via a rights issue and received the funds in early October, raising its total liquidity to €9.3 billion. 

Bernstein analyst Daniel Roeska said even with that buffer IAG needed to focus on reducing costs. "Management will need to significantly lower monthly cash burn to avoid significantly depleting resources by next summer," he said.

But Goodbody analysts said that total liquidity was positive and IAG would be ready for a recovery in demand next spring. 

IAG said it was operating in an environment of "high uncertainty". 

It has been calling for Covid-19 tests at airports to replace quarantine requirements and said that governments had been slower than it expected to adopt such measures. 

IAG announced its preliminary results for the three months to the end of September one week earlier than expected and said it would provide more detailed results on October 30.

IAG also said that its passenger traffic figures declined by 88%, while its seat load factor declined by 38.8 points to 48.9%.

German rival Lufthansa also released its results early this week, reporting a €1.26 billion loss on Tuesday.