More losses for British Airways owner

The owner of British Airways posted another big loss today but insisted a painful restructuring at Spanish carrier Iberia was starting to pay off.

International Airlines Group, formed from a merger of the two airlines in 2011, made a pre-tax loss of €506m in the six months to June 30 following one-off costs from an overhaul which has so far seen the loss of 1,700 Iberia staff.

But excluding the exceptional items, losses reduced to €33m from €253m a year earlier as Iberia bucked 11 quarters of deteriorating trading to post improved losses of €35m for the last three months.

British Airways also improved, with operating profits up to €247m in the three months, from €94m, as the London market and transatlantic traffic remained strong.

IAG chief executive Willie Walsh said the benefits of Iberia’s restructuring were “beginning to show”.

IAG is in the process of cutting Iberia’s capacity by 15%, slashing pay by up to 18% for flight and cabin crew and axing 3,100 Iberia jobs, although its turnaround battle has been tested by Spain’s flagging economy.

Shares opened more than 3% higher today as the group’s operating profit of 245m for the last quarter came in well ahead of City expectations, helped by a 3.7% drop in fuel costs for the half year.

Cantor Fitzgerald transport analyst Robin Byde said the airline had produced “strong numbers with a good turnaround at Iberia supported by positive trading at BA”.