Losses widen for British Airways owner IAG

Rising fuel costs and the Spanish recession blamed for pre-tax losses of €263m in the first quarter.

IAG's CEO, Willie Walsh, and Antonio Vazquez, chairman, at the London Stock Exchange. Credit: Getty Images

International Airlines Group (IAG), the parent company of British Airways and Iberia, has reported a consolidated loss before tax of €263m for the first quarter ended 31 March 2012.

Total revenue increased by 7.8 per cent to €3.92bn (2011: €3.39bn), while operating loss came to €212m (2011: €65m).

During the quarter, fuel costs rose by 24.9 per cent to €1.41bn (2011: €1.13bn) and fuel unit costs climbed 24 per cent. The group's net debt declined €19m to €1.13bn.

Iberia’s overall operating loss for the quarter was €170m (2011: €100m) and British Airways’ operating loss was £62m before exceptional items (2011: £5m). Iberia’s poor performance was blamed on weaknesses in the Spanish domestic market, as well as industrial action by pilots.

Willie Walsh, chief executive of IAG, said: 

The financial performance of our business continues to be undermined by government actions. In addition to the UK government increasing the world’s highest aviation tax – air passenger duty – by double the inflation rate, the Spanish government plans to increase departure taxes from Spain by up to €10 per passenger.

In late April, IAG completed its purchase of bmi. As a result, Walsh added, British Airways is able to "manage its wider Heathrow slot portfolio more effectively" and is launching a new route to Seoul later this year. The group is also planning to launch flights from Heathrow to Leeds-Bradford, Rotterdam and Zagreb and increase frequencies to existing key destinations. Walsh said: "Consultation continues with bmi mainline staff and their trade unions about plans to integrate the business into British Airways." 

Meanwhile, bmi regional has been sold to Sector Aviation Holdings.