Iberia restructuring costs drag down IAG

Iberia restructuring costs drag down IAG

International Airlines Group has reported a first quarter operating loss of €278 million, before exceptional items, an increase from the €249 million losses reported in the same period a year ago.

Losses were largely due to an exceptional charge of €311 million in the quarter, principally relating to restructuring at Iberia.

Willie Walsh, IAG chief executive, said: “We’re reporting an operating loss of €278 million this quarter before exceptional items, which at constant currency was €38 million better than last year. 

“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.

“We are adapting capacity to demand and are reporting a strong group passenger unit revenue performance, despite ten days of Iberia industrial action and the weak economic situation in Spain.

Revenue for the quarter was up 0.5 per cent to €3,939 million, including €46 million or 1.2 per cent of unfavourable currency impact.

Passenger unit revenue for the quarter was up 3.9 per cent (5.3 per cent at constant currency), on capacity decreases of 2.1 per cent.

Fuel costs for the quarter down 3.4 per cent to €1,361 million.

“Non-fuel unit costs have risen due to two short term activities which will benefit the group in the long term. Iberia cut capacity in the quarter however its reduction in headcount and labour costs began in earnest in April. British Airways has increased its headcount in advance of the new aircraft arriving this year,” added Walsh.

“Following acceptance of the mediator’s proposal, we have provided a further €265 million of employee restructuring costs together with fleet stand-down costs within the exceptional items.”

IAG acquired an additional 44.66 per cent in Vueling bringing the group’s total shareholding to 90.51 per cent of the airline earlier this year.

“We have also placed firm orders for 18 Airbus A350 and plan to convert 18 Boeing 787 options into firm orders for British Airways.  Delivery slots for A350 and/ or Boeing 787s have also been secured for Iberia and these will be converted into firm orders once the airline has restructured and can grow profitably,” added Walsh