IAG faced £500m APD bill in 2011

British Airways’ parent company IAG has announced operating profits of £410 million for 2011, despite APD charges of £500 million, and fuel costs up 29.7 per cent. The operating profit figure of €485m (£410m) is up from €225m (£190m) in 2010, with revenues up 10.4 per cent. Pre-tax profit was up from €84m (£70m) in 2010, to €503m (£426m) last year. Reporting a “strong full year performance”, CEO Willie Walsh said that the North Atlantic market remains strong, but warned that “British aviation's competiveness is undermined by the UK government's determination to continually increase Air Passenger Duty with the latest rise due this April”. IAG paid nearly £500 million in APD charges last year, and Walsh said that as a result the group has reduced “by around half” the number of new jobs being created this year, and has postponed plans to bring an extra Boeing 747 back into service. Walsh said that the launch of low-cost subsidiary Iberia Express in March, alongside the restructuring of its network and hub, “will enable Iberia to become more customer focused and cost effective”. He added that the recent deal to buy Bmi (subject to regulatory approval) would give BA the ability to grow at Heathrow “by launching new longhaul routes to growth economies and supporting our shorthaul network”. In a statement IAG said that the outlook for 2012 “is subject to a number of uncertainties”, with demand in London remaining strong, but a potential increase in fuel costs of over €1 billion this year, at current oil prices and exchange rates. The group also warned that traffic may be impacted by the London 2012 Games, with past experience in other host cities suggesting that demand could be dampened during the Games. For more information visit iairgroup.com, ba.com, iberia.com. Report by Mark Caswell