Bad pre-Christmas weather and a Spanish air traffic control strike hit quarterly revenue at British Airways/Iberia parent company International Airlines Group by €71 million. The group also incurred €119 million in one-off costs including restructuring of the Spanish carrier.
Non-recurring costs included the scrapping of two Boeing 747s totalling €19 million and merger completion costs of €26 million. A €43 million bonus provision was included for the airlines.
Excluding these items IAG would have made a quarterly profit of €196 million. Instead, the operating profit for the three months to December 31 came in at €6 million compared to a loss of €114 million in the same period in 2009.
IAG recorded a pre-tax profit of €21m compared with a loss of €208 million the year earlier, based on revenues that were up by 13.4% to €3,812 million. Fuel costs in the three months were up 5.2% to €989 million.
IAG chief executive Willie Walsh said the company was closely monitoring the current political instability in the Middle East and its impact on fuel prices.
“The combined group figures for the final quarter of 2010 show a return to profitability, versus last year, with a good revenue performance based on strong yields and a small capacity increase,” he said.
But Walsh added: “The quarterly profit was affected by severe weather in the UK and a Spanish air traffic controllers’ strike which disrupted the airlines’ operations and reduced revenue by €71 million. Last year, the IAG airlines recovered from the previous years’ losses and returned to profit despite a number of significant external events.”
Looking forward, IAG said its long-haul business remained strong, particularly in the premium sector, but the short-haul European market continued to be “highly competitive”. IAG said: “We are monitoring the impact of the current Middle East instability on fuel prices and have the flexibility to change our capacity plans if necessary.”