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British Airways’ owner IAG has slumped to a pre-tax loss of €997 million in 2012 due to the costs of restructuring Iberia and higher fuel bills.
The loss, which compares to a pre-tax profit of €503 million for IAG in 2011, includes restructuring and impairment charges of €545 million for Iberia which is currently undergoing a major restructuring of its business includes job losses, fleet reductions and capacity cuts.
IAG also made an operating loss of €23 million in 2012 compared to a profit of €485 million during the previous year, despite revenue rising last year by 10.9 per cent to €18.1 billion.
But despite the losses, IAG's share price rose by more than 5 per cent to £2.34 during early trading on the London Stock Exchange on Thursday (February 28). City analysts had been expecting the company's operating losses to be higher at around €88 million.
Willie Walsh, IAG chief executive, said: “2012 has been a year of transformation for IAG - we bought Bmi and integrated it into British Airways and initiated our restructuring of Iberia.
“Revenue was up 10.9 per cent in the full year while our fuel bill rose by 20.4 per cent (to €6.1 billion) with non-fuel costs up 11.6 per cent (to €12 billion).
"The divergent financial performance of our airlines continued. British Airways made an operating profit of €347 million (£274 million), including Bmi losses, while Iberia made an operating loss of €351 million.
"We have embarked on a significant transformation programme in Iberia - and these results emphasise further that the airline must adapt to survive. It must stem its cash losses and adjust its cost base permanently if it is to compete with other airlines in all its strategic markets and lay the foundations for profitable growth in the future.”