BA Owner Dives To Loss As Union Battle Rages
International Airlines Group (IAG), the owner of British Airways and Iberia, has blamed its Spanish arm and higher fuel costs for tumbling to a full year loss.
IAG, Europe's fourth-biggest airline group by market value, reported a loss before tax of 997 million euros (£863m) for 2012, compared to profits of 503 million euros†(£435m) the previous year.
The company, which is run by former BA boss Willie Walsh, said while the performance was hit by a 6.1 billion euros†(£5.3bn) fuel bill - a rise of 20% - there was a 351 million euros†(£303m) operating loss at Iberia.
BA delivered an operating profit of 347 million euros (£300m).
Iberia, Europe's biggest carrier to Latin America, has been battling competition from low-cost airlines and high-speed trains, labour disputes and Spain's deep economic crisis.
IAG said it would press ahead with plans to cut some 3,800 jobs at Iberia as part of a restructuring plan to return the loss-making airline to growth, should there be no agreement with unions next month.
Strikes have previously hit services and sparked clashes between pickets and Spanish police.
IAG also plans to cut capacity by 15% this year at Iberia, by focusing on profitable routes and reducing its fleet by 25 aircraft.
Mr Walsh said: "We have embarked on a significant transformation programme in Iberia and these results emphasise further that the airline must adapt to survive."
The group's chief executive also admitted the outlook for 2013 hinged on the outcome of Iberia transformation plan negotiations and associated costs.
Mr Walsh is no stranger to union disputes following a bitter row over reforms at BA which remained unresolved until after his step up to run IAG in January 2011.
He confirmed IAG still hoped to receive its first Boeing Dreamliner in May but could manage without it if there was a delay due to the plane's grounding on battery safety concerns.