International Airlines Group incurred a €1.3 billion ($1.5 billion) loss in the third quarter, which compares with a €1.4 billion profit last year.
This will curtail plans to ramp up operations as booking trends have been poorer than expected.
In preliminary results, the group said total revenue declined by 83% to €1.2 billion, from €7.3 billion in the same period in 2019.
Passenger capacity, expressed in available seat kilometres, declined by 78.6% in the quarter.
Passenger traffic, measured in terms of revenue passenger kilometres, declined by 88%, while seat load factor declined by 38.8 points to 48.9%.
The airline group had previously guided that it would set capacity at 54-40% of pre-crisis levels in the fourth quarter, as a result of the levelling off of bookings following the reintroduction of quarantine requirements by many European governments.
However, because recent bookings “have not developed as previously expected” and in response to the “high uncertainty” of the current environment, IAG now plans for capacity in the fourth quarter to be no more than 30% of its 2019 level.
As a result, the group no longer expects to reach breakeven in terms of net cash flows from operating activities during the fourth quarter.
At 30 September, IAG had total liquidity of €6.6 billion, comprised of €5 billion of cash, cash equivalents and interest-bearing deposits and €1.6 billion of undrawn and committed general and aircraft facilities.
In addition, €2.74 billion of gross proceeds from the capital increase were received in early October for a total pro-forma liquidity of €9.3 billion.