THE owner of British Airways has plunged to a deeper-than-expected loss after taking another hefty charge in its battle to revive struggling Spanish carrier Iberia.
International Airlines Group (IAG), formed from a merger of the two airlines in 2011, booked a E311m restructuring charge for the three months to the end of March, following more than E500m of charges for 2012.
With losses of E670m for the quarter, IAG’s shares fell 4 per cent to make it the worst performer on the FTSE 100 Index.
IAG is cutting Iberia’s capacity by 15 per cent, slashing pay and axing 3,100 Iberia jobs.
But its turnaround battle has been compounded by 10 days of strikes at Iberia and Spain’s flagging economy.
IAG’s loss compared with E247m euros a year earlier and came despite a 1.7 per cent increase in passenger revenues to 3.3bn euros.
Operating losses of E278m were 12 per cent worse than analysts at Cantor Fitzgerald had predicted, due to weaker-than-expected passenger yields and higher costs.
Chief executive Willie Walsh said: “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.”
British Airways has added an unspecified number of pilots ahead of the delayed arrival of new aircraft this year, which helped drive the cost increase.
They will fly the new Boeing 787 ‘Dreamliner’ jets – whose arrival has been delayed by battery failures.
Two of the planes are expected by the end of next month. BA refused to say how many extra pilots it has recruited.
BA is adding another 24 Boeing 787s and 12 Airbus 380s over coming years. It has also placed orders for another 36 planes, to arrive in 2017.
IAG did not split out separate performance for BA and Iberia.
BA said it will no longer be giving guidance on profits for the full-year as it awaits shareholder approval for a fleet purchase, which could affect profits forecasts.