* Group operating loss 249 mln euros
* Analysts had seen loss at 230 mln to 250 mln euros
* Sees full year fuel bill rising by 1 bln euros
* Predicts FY breakeven due to fuel, costs of bmi deal
* BAA says Heathrow passenger traffic up, cargo falls
By Paul Hoskins
LONDON, May 11 International Airlines Group
, formed by the merger of British Airways and Iberia,
said first quarter losses more than doubled as higher fuel costs
and weakness in Spain undermined strength in premium long-haul
travel out of London.
"Demand in London remains strong," IAG said in a results
statement on Friday. "The Spanish and wider euro zone
macro-economic background deteriorated in Q1, and this is
reflected in a worsening commercial performance from our Madrid
The company reported an operating loss of 249 million euros
($322.7 million) before exceptional items in the traditionally
weak first quarter of the year, up from a 102 million euro loss
a year ago.
Analysts had expected a figure of between 230 million and
250 million euros, according to the company.
Revenue for the quarter rose 7.8 percent versus a year
earlier to 3.9 billion euros.
Chief Executive Willie Walsh said strong demand for premium
long-haul flights out of London, particularly on transatlantic
routes, showed no sign of abating with the British capital
having apparently sidestepped the latest recession.
"The sales and revenue side of the (British Airways)
business is doing very well, it's the fuel cost that's the main
headwind we face," he told reporters during a conference call.
The group's fuel costs for the quarter were 24.9 percent
higher than a year earlier at 1.4 billion euros.
Traffic figures from British airport operator BAA, which is
majority owned by Spain's Ferrovial, also indicated
that premium and business travel remains strong out of London,
even if the lower end of the market is still shrinking.
The operator said 5.8 million passengers passed through
Heathrow during April, marginally up on a year earlier after
what it described as "another record month" for London's main
Reflecting the broader economic weakness, traffic at
Stansted airport, which is popular with budget airlines flying
into London, was down 2.7 percent and group-wide cargo was 1.1
percent weaker, driven by a 2.5 percent drop at Heathrow.
The airline operator said Iberia made an operating loss of
170 million euros ($220.3 million) in the first three months of
the year while the loss at British Airways was less than half
that at 62 million pounds ($100.2 million).
European airlines often lose money in the post-Christmas
lull which is a traditionally quiet time for holiday travel.
For the full year IAG said the prospect of a 1 billion euro
rise in its fuel bill, combined with 90 million euros worth of
restructuring costs stemming from its acquisition of bmi, meant
it would struggle to make any money this year, predicting
operating results would be "around the breakeven level".
Shares in the group were down 2.2 percent at 159.4 pence at
0813 GMT, underperforming a 0.4 percent weaker bluechip FTSE
"IAGs second year is going to be much less good than its
first," Charles Stanley analyst Douglas McNeill wrote in a note
to clients. "We retain our positive view on the stock on the
grounds that the market underestimates the benefits that will
flow from the original merger and the more recent acquisition of
British Midland (bmi)."