Iberia proves a drag on owner IAG

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THE owner of British Airways was dragged to a loss of one billion euros yesterday amid the costly battle to revive Spain’s flagship carrier Iberia.

International Airlines Group (IAG), which was created from the merger of the two airlines in 2011, took hefty charges from restructuring and the write-down of Iberia’s assets as it slumped to losses of 997 million euros (£862m).

British Airways made an operating profit of 347 million euros (£300m) in a year when it bought and integrated regional carrier BMI, but Iberia made a loss of £351 million euros (£303.5m).

CEO Willie Walsh said the results emphasised that Iberia “must adapt to survive” but, despite three months of negotiations, no agreement on a way forward has been reached between the airline and trade unions. It means that IAG will proceed with a 15 per cent reduction in capacity, pay cuts and a redundancy programme that will affect 3,807 Iberia jobs.

Stripping out the restructuring costs, IAG’s operating losses were 68 million euros (£58.8m), better than its guidance in November.