IAG cuts full-year guidance as Iberia weighs
IAG, formed by the merger of British Airways and Iberia, cut its full-year profit guidance after a poor performance from its Spanish unit and rising fuel costs led it to a first-half loss.
Europe’s fourth-biggest airline group by market value today reported an operating loss of €253m (£199m) in the six months to the end of June compared to a profit of €88m in the same period a year ago. Group revenue rose 9.8 per cent to €8.53bn.
IAG said British Airways made an operating profit, after exceptional items, of €13m in the first half, while and Iberia made an operating loss of €263m.
The company said it was working on a restructuring plan for underperforming Iberia which it expects to finalise by the end of September.
“We were previously targeting a break-even operating result this year, after the impact of (Iberia) restructuring costs and the short term earnings drag from the bmi acquisition.
However, in the light of the Spanish macro headwind, we now expect to make a small operating loss in 2012,” said IAG chief executive Willie Walsh.
“The Iberia restructuring plan could lead to further restructuring costs in the latter part of the year.”
Walsh said the Iberia restructuring would likely include short-term downsizing, a reshaping of its network as well as a re-evaluation of all aspects of the business.