International Airlines Group (IAG) has posted its latest financial results, with Iberia making an operating loss of €262 million for the first nine months of this year.
The carrier’s CEO Rafael Sánchez-Lozano said that Iberia is “in [a] fight for survival”, adding that the carrier is “unprofitable in all its markets”, and stressing that “Unless we take radical action to introduce permanent structural change the future for the airline is bleak”.
IAG has announced a “transformation plan” to save the airline, including a 15 per cent cut in network capacity next year, and a reduction in fleet capacity of 25 aircraft (five long-haul and 20 short-haul). There will also be around 4,500 job cuts.
Loss-making routes will be suspended, and while the group has yet to confirm exactly which services will be cut, Business Traveller has obtained confirmation that routes from Madrid to Berlin, Stockholm and Amsterdam (the last already operated by Iberia Express) will be dropped from January 10.
Commenting on the results Iberia’s CEO Rafael Sánchez-Lozano, said:
“The Spanish and European economic crisis has impacted on Iberia, but its problems are systemic and pre-date the country’s current difficulties. The company is burning €1.7 million every day. Iberia has to modernise and adapt to the new competitive environment as its cost base is significantly higher than its main competitors in Spain and Latin America.
“Time is not on our side. We have set a deadline of January 31, 2013 to reach agreement with our trade unions. We enter those negotiations in good faith. If we do not reach consensus we will have to take more radical action which will lead to greater reductions in capacity and jobs”.
IAG’s CEO Willie Walsh warned that “For too long the narrow self interest of the few has damaged the long term future for the many”.
“We will not hesitate to take the necessary steps to protect the interests of our shareholders, our customers and our employees,” said Walsh. “This turnaround plan is critical for Iberia and for the future of Spain. A strong and profitable Iberia can create jobs and boost tourism, a key driver in Spain’s economic recovery”.
There was better news for IAG carrier British Airways, which posted an operating profit of €286 million for the first nine months of 2012, cancelling out the Iberia losses and resulting in an overall profit of €17 million for IAG over the period.
Fuel costs were up 23.5 per cent on the same period in 2011, at €4,633 million.
Yesterday IAG confirmed it is to make a bid for full control of Spanish low-cost carrier Vueling (see online news November 8). Iberia already owns 45.85 per cent of the carrier, and IAG will offer around €113 million for the remaining 54.15 per cent.
Report by Mark Caswell