British Airways and Iberia parent IAG reports loss of €943 million for 2012
01 March 2013
Europe's fourth-largest airline group by market value, IAG reported net loss at €943 million ($1.2 billion) for 2012. The company, which is owner of British Airways as also, Iberia, the Spanish carrier, was hit by a rise in fuel prices of 20 per cent from a year earlier and a €351-million operating loss at Iberia, where workers have threatened 15 days of strikes for the airline's plan to cut 15 per cent in capacity, including 3,800 jobs.
According to analysts, IAG's troubles form part of a larger unsteady future Europe's legacy airlines were faced with - former state-controlled carriers like IAG, Air-France KLM, and Lufthansa - are struggling against competition from low cost rivals like Ryan Air, Easy Jet, and Gulf carriers that are taking away part of their short-haul traffic within the region.
Though the carriers earn most of their revenue from long-haul flights, falling intra-Europe business was cutting into those profits.
Lufthansa and Air France-KLM are working on restructuring their short haul-operations and says it is creating a new low-cost operator to be named Hop.
However, it was not all bad news, with Willie Walsh, IAG's chief executive saying today he hoped the company would turn a profit this year if restructuring did not go as planned.
Walsh, was yesterday forced to defend the 2011 merger of profit-making BA with Iberia after the group was dragged down by €351 milllion of operating losses at the Spanish airline.