BA owner loses £442m after overhaul

International Airlines Group, formed from a merger of the two airlines in 2011, made a pre-tax loss of 506m euros (£442m) in the six months to June 30 following one-off costs from an overhaul which has so far seen the loss of 1,700 Iberia staff.

But excluding the exceptional items, losses reduced to 33m euros (£28.8m) from 253m euros a year earlier as Iberia bucked 11 quarters of deteriorating trading to post improved losses of 35m euros (£30.5m) for the last three months.

British Airways also improved, with operating profits up to 247m euros (£215.8m) in the three months, from 94m euros (£82.1m), as the London market and transatlantic traffic remained strong.

IAG chief executive Willie Walsh said the benefits of Iberia’s restructuring were “beginning to show”.

IAG is in the process of cutting Iberia’s capacity by 15 per cent, slashing pay by up to 18 per cent for flight and cabin crew and axing 3,100 Iberia jobs, although its turnaround battle has been tested by Spain’s flagging economy.

Shares opened more than three per cent higher today as the group’s operating profit of 245m euros (£214m) for the last quarter came in well ahead of City expectations, helped by a 3.7 per cent drop in fuel costs for the half year.

Cantor Fitzgerald transport analyst Robin Byde said the airline had produced “strong numbers with a good turnaround at Iberia supported by positive trading at BA”.