British Airways’ new parent company, International Airlines Group, has managed to curb its losses in its first results since the airline’s merger with Iberia.
The newly-created group reported losses of €47 million in the first quarter of the year, down from €273 million a year ago.
This was due to a revenue increase of 15.4%, partly thanks to strong sales in premium cabins, and despite a rise in fuel costs.
“Fuel costs remain the big challenge facing the industry and we have seen a 31% rise in the quarter. On a unit cost basis, fuel is up 20.1%,” said IAG chief executive Willie Walsh.
“These are the first ever IAG results and they show an improved performance compared to last year. Revenue is up due to increased volumes, particularly in the premium cabins, and improved yields which also showed good premium growth.”
He said the group had been able to increase capacity without additional aircraft and employees “highlighting the good work that has been done in previous years”.
Looking ahead, Walsh said the group expects significant growth in operating profit this year.
“Our long haul business is stable, with strength in the premium sector, but the short haul European market remains highly competitive,” he said.
“We expect the ongoing impact of events in Japan and North Africa / Middle East to have a negative impact on operating profit for the full year of €90 to €100 million.”
He said total fuel cost for the year is expected to be approximately €5.2 billion, or €100 million worse than our previous expectation last quarter.
“Although we achieved 50% recovery of the fuel cost impact in quarter one through revenue initiatives, it should be noted that this task becomes progressively harder through the year as we face tougher revenue comparables with last year.”
By Bev Fearis
