Higher fuel costs push IAG to Q1 loss

AP News
Posted: May 11, 2012 3:25 AM
Higher fuel costs push IAG to Q1 loss

Higher fuel prices and other costs pushed the owner of British Airways and Iberia to a loss in the first quarter, International Consolidated Airlines Group said Friday.

IAG reported a net loss of (EURO)146 million ($189 million) in the first three months of the year. A year earlier, a gain on the acquisition of Iberia nudged the company to a profit of (EURO)33 million.

Fuel costs were 25 percent higher than a year ago, adding (EURO)281 million to operating costs, and a strike by Iberia pilots cost another (EURO)25 million, IAG said. Costs other than fuel were up nearly 6 percent.

Revenue rose 7.8 percent to (EURO)3.9 billion, with revenue per passenger 8.5 percent higher.

IAG shares were down 0.8 percent at 161.7 pence in early trading in London.

British Airways reported an operating loss of 62 million pounds ($100 million) and Iberia's operating loss was (EURO)170 million.

Willie Walsh, IAG's chief executive, said the company's performance was also undermined by government actions.

"In addition to the U.K. government increasing the world's highest aviation tax _ the so-called Air Passenger Duty _ by double the inflation rate, the Spanish government plans to increase departure taxes from Spain by up to (EURO)10 per passenger," he said.

Enough's Enough
Walter E. Williams

In April, IAG completed the acquisition of British-based carrier BMI, acquiring additional slots at London's Heathrow Airport. Walsh said British Airways planned to add a route to Seoul this year, plus new services to Rotterdam and Zagreb.

IAG said demand for flights from London remains strong, with gains in premium services on North Atlantic routes, but the woes of the eurozone hit Iberia's performance from its base in Madrid.