IAG struggles with Iberia restructuring costs

Victoria
By Victoria May 10, 2013 12:58

IAG struggles with Iberia restructuring costs

International Airlines Group, parent of British Airways and Iberia, has reported a loss of €670 million before tax during the first three months, once again citing the high costs of restructuring Iberia for the loss. IAG booked an exceptional charge of €311 million in the quarter, principally relating to restructuring at Iberia.
Revenue for the quarter was up slightly by 0.5% to €3.9bn, however, and the group succeeded in reducing operating costs significantly, with fuel costs for the quarter falling 3.4% to below €1.4bn.
Chie executive Willie Walsh stated that if exceptional costs were stripped out of the overall figures, the operating losses reduced to €278m.
“These results are encouraging with underlying revenue strength in strategic markets, however while the first step towards restructuring Iberia has been taken, there is more work to be done,” he said. “We are adapting capacity to demand and are reporting a strong group passenger unit revenue performance, despite 10 days of Iberia industrial action and the weak economic situation in Spain.”
Passenger unit revenue for the quarter rose 3.9%, on capacity decreases of 2.1%.
“Non-fuel unit costs have risen due to two short term activities which will benefit the group in the long term,” added Walsh. “Iberia cut capacity in the quarter however its reduction in headcount and labour costs began in earnest in April. British Airways has increased its headcount in advance of the new aircraft arriving this year.”
“Following acceptance of the mediator’s proposal, we have provided a further €265 million of employee restructuring costs together with fleet stand-down costs within the exceptional items.
Looking ahead, IAG stated that “Current trading is in line with our expectations. For 2013, excluding Vueling, we expect to reduce Group capacity by 1.8%, and keep non-fuel unit cost flat versus last year.”

Victoria
By Victoria May 10, 2013 12:58
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