By Rhys Jones
LONDON May 10 International Airlines Group
reported wider first-quarter operating losses on
Friday, as deepening trouble at its Spanish carrier Iberia wiped
out progress at British Airways.
IAG, Europe's third-biggest airline group by
market value, made an operating loss of 278 million euros ($364
million) in the year's first three months, traditionally weak
The Spanish carrier contributed 202 million euros of that -
up from 169 million euros a year earlier - as it suffered from
competition from low-cost rivals and high-speed trains, labour
disputes and a recession that has left a quarter of Spaniards
out of work.
Rival European carriers Lufthansa and Air
France-KLM are also slashing jobs and shelving growth
plans as they grapple with high fuel prices, a weak economy and
fierce competition from low-cost carriers and Middle East
IAG took a 311 million euro charge in the quarter for
restructuring that plans to cut 3,100 jobs to return Iberia -
Europe's biggest carrier to Latin America - to profit by 2015.
That was on top of 545 million euros last year and while
Chief Executive Willie Walsh said there was "more work to be
done", he said he did not expect further significant charges
Liberum analyst Peter Hyde called IAG's results a mixed bag.
"To achieve our forecast 2013 operating profit of 505
million euros IAG needs Iberia to restructure quickly and
British Airways to leverage its market position," he said.
BA itself broke even during the quarter, helped by strength
in business and first-class traffic, excluding costs relating to
the integration UK carrier BMI which it bough last year.
But IAG also suffered from the weakness of sterling against
the euro and the dollar, pushing its losses up from 249 million
euros a year ago and above the average 230 million loss forecast
by analysts in a Reuters poll.
Shares in IAG, which have risen 20 percent in the last
month, were down 3.5 percent at 270.5 pence by 1005 GMT, valuing
the business at just over 5 billion pounds.
Prior to its merger with Iberia in 2011 BA faced similar
problems to the Spanish carrier and responded by cutting staff,
lowering salaries and offering more competitive ticket prices.
IAG said it could not provide guidance for 2013 operating
profit because it was waiting for shareholder approval for its
fleet replacement orders, which could impact future profits.
The airline group last month unveiled orders for 18 Airbus
A350 long-haul jets and firmed up orders for 18 of Boeing's
787 Dreamliners, on top of a previous orders for 24 of
the lightweight jets.
Walsh said IAG would receive its first two Dreamliners by
the end of June after deliveries were delayed by two months due
to Boeing's much-publicised battery problems.
Earlier this year Walsh said IAG would report an operating
result close to the 485 million euros profit it delivered in
2011, subject to the success of its Iberia restructuring plan.
Walsh said reports linking Qatari investment groups with the
purchase of Spanish lender Bankia's 12 percent stake in IAG were
wide of the mark.