BA owner IAG sees losses widen on higher fuel costs

British Airways IAG said demand in London was strong, but Madrid had been affected by the eurozone debt crisis

IAG, the parent firm of British Airways (BA) and Spain's Iberia, has reported widening losses, due in large part to higher fuel costs.

Pre-tax losses for the first three months of the year were 263m euros ($340m; £211m), compared with losses of 47m euros a year earlier. Revenue rose 8% to 3.9bn euros.

Fuel costs rose by 281m euros, while strikes at Iberia cost 25m euros.

The airline said the outlook for the aviation industry remained uncertain.

Iberia made an operating loss of 170m euros in the quarter, while BA's equivalent loss was £62m (77m euros).

The company said demand in London remained strong, but the eurozone debt crisis had affected business in Madrid.

"Iberia's performance reflects the weakness of the Spanish domestic market and industrial action by pilots," said IAG's chief executive Willie Walsh.

"For BA, although the London market and demand for transatlantic travel remains strong, its performance has been affected by rising fuel costs."

He added that the airline's financial performance continued to be undermined by government actions, including the rise in Air Passenger Duty in the UK and Spanish plans to increase departure taxes.

The company said that at the current oil price and exchange rates, fuel costs would be 1bn euros higher this year than last.

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