BA making money, Iberia losing money for parent IAG

“BA is making money and Iberia is losing money. The Spanish economy is weak and operating costs at Iberia are too high, unacceptably so, but this is being tackled,” chief executive Willie Walsh said.

Europe’s fourth-biggest airline group by market value said 2011 operating profit doubled to 485 million euros, helped by higher than expected cost savings from the BA-Iberia merger and strong growth in business and first class traffic, especially on transatlantic routes.

IAG said profit in the final three months of 2011 grew well but that the outlook was uncertain due to soaring fuel costs and financial uncertainty in the eurozone, especially in Spain.

Industry body IATA said the global airline industry would suffer in 2012 because of continuing high fuel prices and the eurozone debt crisis, even though passenger traffic rose in January from a year earlier and the slide in air freight seemed to have tapered off.

Germany’s Lufthansa and Air France-KLM have embarked on cost-cutting programmes, trimmed profit forecasts and slashed plans to expand capacity this year after results were battered by high fuel costs and weakening consumer demand.