Weak Iberia weighs on IAG

INTERNATIONAL Airlines Group this morning posted a full-year operating loss of €23m (£58m), as it was hit by its beleaguered Iberia unit.

This year’s figure for IAG, which owns the British Airways and Iberia brands, marks a sharp drop from operating profit of €485m in 2011.

Before exceptional items, British Airways made an operating profit of €347m over the year, while Iberia slumped to an operating loss of €351m.

Fuel costs also weighed on FTSE-listed IAG, as they increased 20.4 per cent to €6.1bn.

Iberia, Europe's biggest carrier to Latin America, has been battling competition from low-cost airlines and high-speed trains, labour disputes and Spain's deep economic crisis and bleeding cash as revenue fails to cover high operating costs.

IAG said today it would press ahead with plans to cut almost 3,800 jobs at Iberia as part of a restructuring plan to return the loss-making airline to growth.