International Airline Group, the corporate identity of the merged corporate British Airways/Iberia, is reporting slashed losses, reduced debt and increased revenues in the first three months of 2011.
The Q1 2011 results are the combined returns from BA and Iberia, while the Q1 2010 figures are exclusively BA’s.
The pair saw operating losses drop to €102 million compared with BA’s €238 million during the same period last year. Pretax losses shrunk even more, dropping to €47 million from €273m.
Revenues for the quarter were also strong, up by more than 15% to €3,636 million. Willie Walsh, chairman of IAG, said that “Revenue is up due to increased volumes, particularly in the premium cabins, and improved yields which also showed good premium growth.”
The figures show that yield in the premium cabin was up 4.4%,with volumes ahead by nearly 12%.
Another positive in the results is a reduction in net debt of €383 million to €512 million.
Fuel costs however are a concern. ““[They] remain the big challenge facing the industry and we have seen a 31% per cent rise in the quarter. On a unit cost basis, fuel is up 20.1%,” he said.
Looking ahead, fuel costs remain a big concern. Walsh said that IAG’s fuel bill for the year, including all hedging activities, will break the €5bn barrier, €100m more than its last prediction.
He also said that the “ongoing impact of events in Japan and North Africa / Middle East [will] have a negative impact on operating profit for the full year of €90 to €100 million”.
Despite these two headwinds, Walsh still expects “significant growth in operating profit this year” with all synergy targets met.
At 10.15am, IAG shares were trading in London at 251.80p, a 2.36% increase on last night’s close.