International Airlines Group has reported a loss before tax of €390 million for the first half of financial 2012, compared to a profit before tax of €39 million for the same period of 2011.
While British Airways made an operating profit, after exceptional items, of €13 million in the half year to June 30th, Iberia made a loss of €263 million.
However, revenue for the half year was up 9.8 per cent to €8,532 million, including €278 million or 3.6 per cent currency impact.
Passenger unit revenue for the half year was up 8.9 per cent, on top of capacity increases of 2.6 per cent, largely due to the consolidation of the bmi route network.
Fuel costs were up 25 per cent to €2,973 million.
Willie Walsh, IAG chief executive, said: “We made an operating loss of €4 million in the quarter, including €50 million of bmi losses, before exceptional items.
“While our revenue performance was good, up 11.5 per cent, this was countered by an increased fuel bill of €314 million, a rise of 25.1 per cent.
“Our synergies programme continues apace and we remain on track to deliver our 2012 targets and €500 million annual benefits by 2015.
“While we have made specific investments for longer term commercial benefits such as the Olympic sponsorship and Master brand advertising at British Airways and the development of our Avios frequent flyer currency, we remain focused on stringent cost control across the Group,” he added.
bmi restructuring costs accounted for most of the €38 million of exceptional items.
The integration of bmi mainline into British Airways is “going well”, IAG said, with completion due by the year end.
“There remains a stark difference in the performance of our subsidiaries. British Airways made an operating profit despite rising fuel prices while Iberia’s losses deepened,” continued Walsh.
“Iberia’s problems are deep and structural and the economic environment reinforces the need for permanent structural change.
“We are currently working on a restructuring plan for Iberia which we anticipate will be finalised by the end of September.
“This is likely to include short term downsizing, network reshaping to deliver higher unit revenues and a re-evaluation of all aspects of the business to deliver competitive costs and service to enable long-term profitable growth.
“Inevitably, we will not be able to avoid job losses as part of this process.
“There has been an excellent start made by Iberia’s new cost effective subsidiary Iberia Express, which was profitable in its third full month of operation in June and has established an exemplary operating performance from Madrid Barajas.”