International Airlines Group (BA/Iberia/BMI) is having a bad time of it – loosing €390m ($476m; £306m) loss for the six months to the end of June.
This is especially bad as the group turned in a €39 million pre-tax profit in the same period in 2011. Revenue increased in the period by10% to €8.5bn vs €7.8bn in the same timeframe.
Whilst revenue has been up, costs has also risen, with fuel costs going up by 25% as well as the costs of business restructuring (especially since it’s taken on BMI too)
Most of the trouble seemingly has come from the Spanish arm of Iberia which sustained a loss €263 million during the first half of 2012.
IAG’s CEO – Willie Walsh has thrown out a warning
“Iberia’s problems are deep and structural and the economic environment reinforces the need for permanent structural change. We are currently working on a restructuring plan for Iberia which we anticipate will be finalised by the end of September.”
“Inevitably, we will not be able to avoid job losses as part of this process.”
As well as redundancy costs, migration costs to Iberia Express, the economic conditions that the Iberia business unit operates in are worsening in Spain.
Very few carriers are making it through unscathed this year as the European downturn is having a major hit. Combined with high fuel costs, carriers are trying to reorganise themselves to make profit.
But when there are staff losses, it always makes those profits a bit more bitter.