Iberia: six successive years of losses. Now will 2014 finally see a return to profit?

Iberia's 2013 pre-exceptional operating loss was an improvement on its 2012 result, but it has now seen six successive years of losses and has accumulated more than EUR1.1 billion of operating losses since 2008. Over this period, capacity cuts have not been matched by cost reduction, but revenues have tumbled more rapidly.

This reflects the difficulty in cutting the significant fixed costs in the airline business, particularly in a highly unionised legacy carrier, and the lag between the reduction of capacity (and revenues) and the removal of costs.

It has been a long path, and the end has not been reached, but the 2013 results suggest that the restructuring of Iberia may now be having a beneficial impact on its financial performance. Moreover, recent productivity agreements with unions give some reassurance that industrial relations are also on an upward path. Sustainable levels of profitability are far from assured, but, with a return to profit slated for Iberia in 2014, they can at least now be contemplated.