IAG posts first-quarter operating loss of €278 million

Weakness at group’s Spanish carrier Iberia wipes out progress at British Airways


International Airlines Group reported a first-quarter operating loss of €278 million as continued weakness at its Spanish carrier Iberia wiped out progress at British Airways.

The loss at IAG, Europe’s third-biggest airline group by market value, was greater than the €249 million loss reported a year ago and above the average €230 million forecast by analysts. Iberia has been battling competition from low-cost airlines and high-speed trains, labour disputes and Spain’s deep economic crisis. It has been bleeding cash as revenue fails to cover high operating costs.

IAG took a €311 million charge in the quarter relating to restructuring at Iberia, on top of a €545 million charge in 2012.

IAG’s chief executive Willie Walsh said today there had been “underlying revenue strength in strategic markets” but that there was “more work to be done” to restructure Iberia, Europe’s biggest carrier to Latin America.

IAG said BA had a strong performance in the quarter, boosted by business and first-class traffic, especially on transatlantic routes.

The company 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 profit forecasts.

European carriers including IAG, Lufthansa and Air France-KLM are slashing jobs and shelving growth plans as they grapple with soaring jet fuel prices, a weak economy and fierce competition from low-cost carriers and Middle East airlines.