Iberia drags IAG into the red
IAG has blamed a weak performance by Iberia and higher fuel costs for dragging it into a full-year loss for 2012.
The airline group, which comprises British Airways and Iberia, reported a pre-tax loss of €997 million compared to profit of €503 million in 2011.
The loss includes a restructuring charge of €202 million at Iberia and €343 million "impairment of Iberia intangible assets".
BA achieved an operating profit of €347 million, but Iberia recorded an operating loss of €351 million.
The results were also hit by a €6.1 billion fuel bill, 20% higher than in 2011.
IAG chief executive Willie Walsh said 2013 would be impacted by the continuing transformation of Iberia.
"We have embarked on a significant transformation programme in Iberia – and these results emphasise further that the airline must adapt to survive," he said.
"It must stem its cash losses and adjust its cost base permanently if it is to compete with other airlines in all its strategic markets and lay the foundations for profitable growth in the future.
"Despite three months of negotiations between Iberia and its trade unions, no agreement was reached on an initial restructuring plan. Therefore, we have announced that Iberia will proceed with a 15% cut in capacity and has started the formal collective redundancy process which will affect 3,807 jobs. "
Subject to the outcome of negotiations on the Iberia turnround plan, Walsh said IAG expects to record a better operating profit before exceptional items in 2013 than reported in 2011.
He said in 2012 BA had produced a solid financial performance, benefitting from a strong London market.
"The integration of bmi into British Airways was handled very effectively and, crucially, the airline remained focused on its overall business performance during this period. We look forward to extracting the full potential and financial benefits that the bmi acquisition brings us in years ahead," he said.
But he warned of the possible impact of rises in airport charges at London airports.
“We are watching carefully as the UK CAA reviews Heathrow airport’s charges from 2014. It is critical that the airport’s shareholders are not over-rewarded at the expense of customers," he said.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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