The owner of British Airways plunged to a deeper-than-expected first quarter loss yesterday as it revealed the cost of turbulence at Spanish carrier Iberia.
International Airlines Group (IAG) lost £566 million in the three months to March. The period included ten days of strikes at Iberia before an agreement was reached to cut the carrier’s capacity by 15 per cent, slashing pay and axing 3,100 jobs. IAG has been battling to turn around struggling Iberia since the merger with BA that created the group in 2011.
British Airways also put in a lacklustre performance after hiring pilots ahead of the delayed arrival of new aircraft this year, which helped drive the cost increase. They will fly new Boeing 787 jets – whose arrival has been delayed by battery failures. Two of the planes are expected by the end of next month. 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.
Chief executive Willie Walsh said the results were “encouraging” as they showed “underlying revenue strength in strategic markets”. But he acknowledged that while the first step towards restructuring Iberia has been taken, there is more work to be done.
Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers , said IAG’s losses and failure to provide profit guidance for the year were “testing investors’ resolve”.