British Airways and
Iberia's parent company posted an after-tax loss of €146 million for the March
quarter, reversing a €33 million profit from the year-earlier period, which included
Iberia's standalone results from January 2011. Formed after BA and Iberia merged, International Consolidated Airlines Group cited a 24.9 percent
spike in fuel costs.
The airline group
reported strong revenue metrics, including a 9 percent jump in total passenger
revenue to €3.3 billion, an 8.5 percent improvement in passenger unit revenue
and a 5.3 percent increase in passenger yield.
IAG indicated that
demand in London "remains strong, with a continuation of the encouraging
trends we saw in the second half of 2011 in our long-haul premium cabins,
particularly on North Atlantic routes." BA's performance, however, was
adversely affected by fuel costs and, according to IAG CEO Willie Walsh, will
suffer from the recent increase in U.K.'s Air Passenger Duty. The carrier
finished the March quarter with a £62 million operating loss before exceptional
items, wider than the £5 million loss posted a year earlier.
Iberia's operating loss
of €170 million grew from €100 million in the first quarter of 2011, partly due
to "weakness of the Spanish domestic market," according to Walsh.
IAG's report noted that "the Spanish and wider eurozone macro-economic
background deteriorated in Q1, and this is reflected in a worsening commercial
performance from our Madrid hub." Iberia during the current quarter took a
€25 million hit from a pilots strike.
Looking ahead, IAG
expects its full-year fuel costs to increase by more than €1 billion. Overall,
the airline group projected a breakeven operating result for full-year 2012,
after exceptional items that include the one-time costs associated with British
Midland's (BMI) restructuring.
IAG in April completed
the BMI purchase. "As a result, British Airways is able to manage its
wider Heathrow slot portfolio more effectively and is launching a new route to
Seoul later this year," according to Walsh. "Airports across the United
Kingdom and beyond have contacted us about starting services and, subject to
reaching satisfactory agreement with them, we plan to also launch flights from
Heathrow to Leeds-Bradford, Rotterdam and Zagreb and increase frequencies to
existing key destinations. Consultation continues with BMI mainline staff and
their trade unions about plans to integrate the business into British Airways."
IAG also sold off BMI Regional
to Sector Aviation Holdings Ltd., and is exploring options for BMIbaby, which
is "not part of our plans," according to the company.