28th Feb 2014 09:12
LONDON (Alliance News) - International Consolidated Airlines Group PLC Friday said it swung back to an operating profit in 2013, driven by growth at British Airways and Spanish airline Vueling, and said it expects cost cutting to further boost its margins in 2014.
The airline group spent the year growing British Airways, adding Vueling to its stable, and trying to restructure and turn around its ailing Iberia airline in the face of stiff resistance from labour unions.
It said it swung to an operating profit before exceptional items of EUR113 million in the fourth quarter of 2013, compared with a EUR40 million loss a year earlier, meaning it swung to a EUR770 million profit for the year, from a loss of EUR23 million in 2012. It swung to a net profit of EUR122 million, compared with a loss of EUR716 million in 2012.
Revenues rose to EUR18.68 billion, from EUR18.12 billion, with passenger unit revenues up 0.6%. Fuel costs fell to EUR5.95 billion, from EUR6.10 billion, and non-fuel costs dropped 0.7%.
"In 2013, we strengthened the group by acquiring Vueling, embarking on Iberia's transformation and enhancing British Airways' revenue performance. This has led to a strong financial recovery and return to profitability," IAG Chief Executive Willie Walsh said in a statement.
British Airways made an operating profit of EUR651 million, more than double the 2012 level, Vueling's profit rose EUR101 million to EUR137 million, while Iberia's loss narrowed to EUR166 million, from a loss of EUR351 million.
Iberia recently reached a deal to cut pay and increase productivity with pilots union SEPLA. However, its struggles with its unions aren't over yet. It is still battling to get an agreement with cabin and baggage handler unions. The UGT union in late January threatened strike action after rejecting the revised and less-stringent labour deal put forward by Iberia management, although it has entered arbitration first as required under Spanish law.
"The plan is moving into its second year of execution and substantial progress has been made in reducing capacity, staff numbers and pay. However, risk still remains as changes in working practices leading to further reductions in staff numbers must be achieved if Iberia is to secure its future and grow," IAG said in its statement.
For 2014, IAG said it expects to "make steady progress" towards its 2015 operating profit target of EUR1.8 billion. It predicted that unit revenues will be relatively flat, but falling unit costs will boost margins.
IAG is not currently paying a dividend.
The airline group's shares were down 2.1% at 442.2639 pence early Friday.
By Steve McGrath; [email protected]; @SteveMcGrath1
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