British Airways’ owner IAG made a pre-tax loss of €390 million in the first half of 2012 as the company was hit by losses from Iberia and Bmi.
Despite increasing revenue by 9.8 per cent to €8.5 billion, IAG fell into red as the company’s fuel bill rose 25 per cent and Iberia made an operating loss of €263 million for the six months to the end of June. IAG had made a profit of €39 million during the same period in 2011.
But there was better news for British Airways as it made an operating profit of €13 million for the half-year.
IAG chief executive Willie Walsh said: “There remains a stark difference in the performance of our subsidiaries. British Airways made an operating profit despite rising fuel prices while Iberia's losses deepened.
“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.”
IAG also made an operating loss of €4 million between April and June as Bmi made losses of €50 million following the acquisition from Lufthansa in April.
“Bmi restructuring costs accounted for most of the €38 million of exceptional items,” added Walsh. “These costs and the airline's losses are in line with our expectations. The integration of Bmi mainline into British Airways is going well with completion due by the year end.”
Walsh also warned that IAG was set to make a “small operating loss” in 2012, having previously said the company would break-even.
“A number of factors have improved over the past three months,” he said. “Underlying British Airways trading conditions remain firm and Bmi integration is on track, but any benefit from an easing of fuel prices has been more than offset by the deterioration in Spanish economic conditions.
“We were previously targeting a break-even operating result this year, after the impact of restructuring costs and the short-term earnings drag from the Bmi acquisition. However, in the light of the Spanish macro headwind, we now expect to make a small operating loss in 2012.”