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| Costs related to turning around struggling Iberia have hit IAG's results |
Losses at International Airlines Group have ballooned in the first quarter due to its troubled Spanish carrier Iberia.
The owner of Iberia and British Airways reported a net
quarterly loss of 630m euros ($820m; £531m) compared with a net loss of
129m euros last year.
IAG is trying to turn around Iberia, which has been
struggling amid the economic crisis in Spain and stiff competition from
budget carriers.
It took a 311m-euro charge mainly related to restructuring at Iberia.
In the first three months of the year, IAG said total revenue
was up 0.5% to 3.9bn euros, with passenger revenue up 3.9% to 3.34bn
euros.
"These results are encouraging with underlying revenue
strength in strategic markets. However while the first step towards
restructuring Iberia has been taken, there is more work to be done,"
said chief executive Willie Walsh.
IAG pushed through a plan to cut costs at its Spanish unit
aimed at returning the company to a 600m-euro profit by 2015. Workers at
the Spanish airline staged two strikes earlier this year over 3,000 job
cuts.
IAG is also planning to take over Vueling, the
Spanish low-cost carrier, in which the company already holds a 46%
stake. The carrier is expected to co-operate with Iberia while remaining
a standalone company within the group.
The firm said British Airways had enjoyed a strong
performance in the quarter thanks to a rise in business and first-class
flights on its transatlantic routes.
However, IAG said it could not provide profit guidance for
this year because it was waiting for shareholder approval for new
planes, which could affect forecasts.
Dreamliner orders
Last month, IAG ordered 18 Airbus A350 aircraft for BA as part
of a move to replace a fleet of 30 Boeing aircraft over the next 10
years.
It also agreed to buy 18 Boeing Dreamliners to replace some
of its ageing jumbo jets. Mr Walsh said that the company was scheduled
to take delivery of two Dreamliners by the end of June.
Analysts said that IAG still had much work to do.
"The airline is today testing investors' resolve," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.
"The restructuring process at Iberia still remains a slow
work in progress, whilst rivals such as Easyjet and Ryanair continue to
take advantage of prohibitive work practices still being suffered by
former state airlines.
"On the upside, management is clearly battling hard in Spain,
with the long term aim of establishing a major hub to expected growth
in Latin America," he said.
Sources :
http://www.bbc.co.uk/news/business-22478344
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