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Europe and transatlantic flights boost IAG

IAG owns BA, Iberia and Vueling
IAG owns BA, Iberia and Vueling

British Airways’ parent company IAG has continued to post losses in its second quarter results but saw a traffic boost from Vueling and US routes.

The group’s operating profit for the three months up to 30 June were at EUR245 million (US$325m), dramatically up from EUR4m year-on-year but in the six months up to 30 June saw a pre-tax loss of EUR506m. Its operating loss for the half year came in at EUR33m while revenue for the six months was up 2.1% to EUR8.7bn.

Iberia’s restructuring programme has helped the increase in numbers although the group continues to make job cuts at the Spanish carrier to reduce the loss the group faces. In comparison, BA made a EUR247m operating profit in the second quarter results.

“The benefits of Iberia’s restructuring are beginning to show. Having reduced capacity at Iberia in the first quarter, costs began to be taken out in the second quarter following the implementation of the mediator’s proposal,” said IAG’s chief executive Willie Walsh.

“Nearly 1,700 employees have left the airline so far with remaining staff taking salary reductions of 18% for flight and cabin crew and 11% for all other employees. This is the first step in the restructuring but it is already bearing fruit with Iberia’s losses down from EUR93 million last year to EUR35 million reversing the negative trend of the last 11 quarters,” he added.

New acquisition Vueling, which IAG now owns 90.51% of, posted an operating profit of EUR27 million for the six months up to 30 June.

“The airline has continued to manage its capacity growth effectively by expanding its business while increasing profits. It’s also benefitted from its Barcelona base where it has developed a strong competitive position,” said Walsh.

Together with Vueling the group’s traffic for continental Europe had been higher than expected, with capacity up 13.7% and traffic increases of 18.2% to set a load factor of 75.3%.

Its North America routes are performing well with load factors at an 83.2% average. Its Caribbean, Latin America, Asia Pacific, Africa and Middle East routes all saw load factors between 76-82%.

Across BA and Iberia the group saw capacity go up 1.2% for the first six months of 2013 against a 2% increase in traffic.