International Airlines Group plans to raise capacity by around 6% this year in a “bounce back” from the economic downturn for 2009-10.
But the political turmoil in North Africa and the Middle East and the earthquake and tsunami in Japan will hit year-end operating profits by between €90-100 million.
Chief executiveWillie Walsh said the instability in the Middle East seemed to be worsening following disruption in “routine” premium travel in the region.
The British Airways/Iberia parent will remain vigilant over the summer in order to respond to any weakening of demand or further rises in already high fuel prices. Increased capacity is being achieved with “no material growth” in fleet or staff.
IAG, commenting on improved first quarter results, is withdrawing 12 short-haul Airbus aircraft from its combined fleet after admitting that the short-haul sector continues to remain competitive, particularly in Spain.
A total of 14 short-haul routes and two in long-haul are being cut this summer while frequency is being reduced on 35 routes and raised on a further 21.
Chief financial officer Enrique Dupuy said that non-premium traffic remained “competitive” in both short and long-haul sectors. Long-haul premium business was described as strong and short haul premium as “stable”.
Planned capacity rises would be “measured” in key markets. “We are following market demands so we can be prepared to adjust this summer if we see signals of declining demand,” said Dupuy.
Walsh said the trend in improving long-haul performance had continued into April with recovery seen to be quicker than expected.
There are no plans for any significant changes in staffing levels, although backroom numbers are likely to continue to be reduced while BA is recruiting more pilots and cabin crew.
Walsh signalled “structural change” in Iberia’s short and medium-haul operations due to difficulties in the Spanish domestic market and said he would like to see one rival “disappear”.
IAG wants to strengthen its overall position with a particular focus on routes between Europe and Asia. This is likely to be achieved through organic growth and investment, co-operation and more airlines joining the group in the future, according to Walsh.