International Airlines Group (IAG) has posted a pre-tax loss of €997 million for 2012, compared with a profit of €503 million for the previous year.

The figure includes restructuring and impairment charges associated with Spanish carrier Iberia of around €545 million.

British Airways made an operating profit of €347 million for the year to December 31, 2012, but this was countered by losses of €351 million at Iberia.

Overall the group posted an operational loss of €23 million before exceptional items, compared with a profit of €485 million in 2011. Fuel costs were up over 20 per cent over the period.

Announcing the results CEO Willie Walsh said:

“2012 has been a year of transformation for IAG – we bought Bmi and integrated it into British Airways and initiated our restructuring of Iberia. Our operating performance was solid and the €23 million loss before exceptional items was better than our guidance to the market.

“However there was a significant impact on the results from exceptional and non-operating items leading to a pre-tax loss of €997 million. These items include provision for restructuring and impairment costs in Iberia and non-cash pension accounting requirements.

“Revenue was up 10.9 per cent in the full year while our fuel bill rose by 20.4 per cent with non-fuel costs up 11.6 per cent.

“We achieved synergies of €313 million in 2012, exceeding our €225 million target set at the beginning of the year. This is another excellent performance, in particular through higher than expected revenue synergies. However, we must not be complacent – while this trend must continue it needs to be hand-in-hand with structural change.”

Referring to the operating profit and loss figures posted by BA and Iberia respectively, Walsh admitted to a “divergent financial performance” of IAG’s member airlines, and said Iberia “must stem its cash losses and adjust its cost base permanently if it is to compete with other airlines in all its strategic markets and lay the foundations for profitable growth in the future”.

He confirmed that the group would press ahead with plans to cut Iberia’s capacity by 15 per cent and lose up to 3,800 jobs.

For more information visit iairgroup.com, ba.com, iberia.com.

Report by Mark Caswell