LONDON -- International Consolidated Airlines (LSE: IAG) -- which was formed after the merger of British Airways and Iberia in January 2011, and is now one of the world's largest airline operators -- has disappointed the market and posted bigger first-quarter losses than previously expected. Shares were down about 2.5% in early morning trading Friday.
Pre-tax losses for the quarter reached a massive €670m. That compares with a €247m loss in the same quarter last year. Basic loss per share was €0.34 compared to a loss of €0.72 in the prior-year period.
A glimmer of good news, total revenue for the quarter was up, albeit only slightly -- at €3.94bn, compared with €3.92bn a year prior. IAG also reports that revenues per passenger have ticked up nearly 4%.
The loss-making continues, however, and appears heaviest at the Iberia division -- and IAG said today that it's had to pay out another €311m as part of the restructuring.
IAG announced in February that it had swung to an operating loss of €23m in 2012 before Iberia's restructuring, and €68m post-restructuring. This compares with an operating profit of €485m in the previous year.
Indeed, performance in the Spanish division has buoyed the group's performance over the past year. Although British Airways remains resilient and generated an operating profit of €347m last year before exceptional charges, Iberia posted a huge €351m operating loss.
Carrying more than 60 million passengers per year to over 200 destinations across the globe, IAG has size on its side -- and growth in its sights.
In April, the airline group announced it is extending its presence in the lucrative low-cost carrier space by acquiring Spanish airline Vueling, in which it already holds more than 45%. More positive news recently includes the company's announcement that it has inked a USD $4bn deal with Boeing to convert options into the delivery of 18 of the plane-builder's 787 Dreamliner airplanes.
IAG shareholders, it seems, will need to be patient. While IAG has taken a first big step toward the Iberia restructuring, there is still work to be done.
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