BRITISH Airways-owner IAG has warned of fresh job losses after Spain’s economic crisis and “deep and structural” problems at Spanish carrier Iberia plunged the group into the red.
A further rise in fuel costs added to the headache at IAG, which was formed from the 2011 merger of BA and Iberia. Results published yesterday revealed an operating loss of €253 million (£199m) for the six months to the end of June, compared with profits of €88m a year earlier.
While steady trading conditions helped BA book an operating profit of €13m, Iberia’s losses deepened to €263m.
Willie Walsh, the head of IAG – International Airlines Group – admitted there was a “stark difference” in the performance of the two subsidiaries. He said the reorganisation of Iberia would mean shedding jobs and reshaping its network.
“Iberia’s problems are deep and structural and the economic environment reinforces the need for permanent structural change,” said Walsh.
Iberia generates 27 per cent of the group’s turnover, with half of this coming from Spain. BA derives only around 5 per cent of its revenues on routes to Greece, Italy, Portugal and Spain.
The region’s difficulties have prompted the group to establish a eurozone crisis management team, which meets every two weeks to review progress.
IAG had expected to break even this year, but with the debt-laden Spanish economy expected to contract this year and next, it is now forecasting a small operating loss for 2012.
BA and Iberia have retained their brands in the merger, which is expected to save some €400m a year by its fifth year. It is now the third largest scheduled airline group in Europe and the sixth largest in the world, based on revenues.