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'Stark difference' in performance of IAG subsidiaries in Jun-2012 quarter

6-Aug-2012 4:32 PM

International Airlines Group (IAG) CEO Willie Walsh stated (03-Aug-2012) there remains a "stark difference" in the performance of the company's subsidiaries. During the three months ended 30-Jun-2012, British Airways made an operating profit despite rising fuel prices while Iberia's losses deepened. “Iberia's problems are deep and structural and the economic environment reinforces the need for permanent structural change," Mr Walsh noted, adding, "We are currently working on a restructuring plan for Iberia which we anticipate will be finalised by the end of September. This is likely to include short term downsizing, network reshaping to deliver higher unit revenues and a re-evaluation of all aspects of the business to deliver competitive costs and service to enable long-term profitable growth. Inevitably, we will not be able to avoid job losses as part of this process." Mr Walsh also noted “there has been an excellent start made by Iberia's new cost effective subsidiary Iberia Express, which was profitable in its third full month of operation in June and has established an exemplary operating performance from Madrid Barajas.” Mr Walsh noted that in the three months ended 30-Jun-2012, “bmi restructuring costs accounted for most of the €38 million of exceptional items." He continued, "These costs and the airline's losses are in line with our expectations. The integration of bmi mainline into British Airways is going well with completion due by the year end." IAG reported operating loss of EUR4 million in the quarter, including EUR50 million of bmi losses, before exceptional items.