Business

BA and Iberia parent group reports losses

  • 3 August 2012
  • From the section Business
British Airways and Iberia planes
Image caption IAG says it will announce job cuts and a restructuring plan for Iberia by the end of September

The parent group of British Airways and Iberia has reported a 390m euro ($476m; £306m) loss for the six months to the end of June and warned it: "will not be able to avoid job losses".

That compares with a 39m euro pre-tax profit in the same period last year.

Spanish carrier Iberia was worst hit. Its operating losses widened to 263m euros in the period.

International Airlines Group said it would finalise a restructuring plan for Iberia by the end of September.

Revenue rose 10% to 8.5bn euros compared with 7.8bn euros in the same period last year.

Passenger numbers rose and IAG made more money for each passenger.

But that increased revenue was more than offset by the 25% rise in fuel costs and charges from the process of restructuring its business.

Despite those higher fuel charges, UK airline British Airways turned a small operating profit of 13m euros at the start of the year.

The group's main problems reside with its Spanish carrier Iberia.

In a statement, chief executive Willie Walsh warned: "Iberia's problems are deep and structural and the economic environment reinforces the need for permanent structural change. We are currently working on a restructuring plan for Iberia which we anticipate will be finalised by the end of September."

"Inevitably, we will not be able to avoid job losses as part of this process," he added.

As well as the cost of future redundancy payouts Iberia faces particular problems due to the worsening economic conditions in its home market of Spain.

Originally, IAG had forecast it would break even this year.

"However, in the light of the Spanish macro headwind, we now expect to make a small operating loss in 2012," said Mr Walsh.

IAG shares ended Friday 5.2% lower at 151p.

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