IAG warns over rising fuel despite strong revenue gains

IAG warns over rising fuel despite strong revenue gains

International Airlines Group, the company formed from the merger of British Airways and Iberia, has become the latest carrier to warn of the threat of high oil prices, which overshadowed a solid set of quarterly figures.

The firm said higher fuel costs would cost it an additional €100m this year. It also estimated €90m-100m would be lost because of the Japan earthquake and the civil unrest in North Africa and the Middle East.

The quarterly results, the first since the merger of the two airlines, showed losses narrow on rising revenues. These narrowed to a loss of €47m in the first quarter of the year, down from a €273m loss a year ago.

Revenues rose 15.4 percent on the year as business volumes recovered, and despite a 31 percent rise in fuel costs.

Willie Walsh, the chief executive of IAG said: “Fuel costs remain the big challenge facing the industry.”


However, he said the firm had progressed in cutting its non-fuel costs, with unit costs excluding currency changes down 7.6 percent.

“The continued focus on cost control has been achieved while we have seen some measured increases in capacity. We have been able to increase capacity without additional aircraft and employees.”

Passenger numbers rose only 3.2 percent, but passenger revenues rose 15 percent as customers spent more and a larger proportion went for higher class seats.

Cargo performed strongly, with 25 percent higher.

The carrier added that its long-haul business was “stable, with strength in the premium sector” but remarked upon tough competition in the European short-haul sector.