IAG to post big loss

Only created in 2011 following the merger of British Airways and Iberia, IAG finds itself in a very difficult position with its BA component producing excellent profits and well set for the future with new aircraft due and staff difficulties resolved, whilst Iberia is in exactly the opposite position.

"Iberia is in a fight for survival and we will transform it to reduce its cost base so it can grow profitably in the future", IAG Chief Executive Willie Walsh said in a statement on Friday.  Mr Walsh wants to cut almost a quarter of Iberia's workforce, reduce capacity and routes, and restore profitability. 

In the first nine months of the year Iberia posted a €262m operating loss, whilst BA’s profit was €286m.  IAG said it expects to make an operating loss of about €120m in 2012, after exceptional items including the purchase of bmi.

"Although radical changes are proposed at Iberia, this reflects the scale and extent of the problems there", Espirito Santo analyst Gerald Khoo said.

"The problems are systemic and pre-date the current economic crisis and we continue to believe the market has underestimated the scale and nature of the challenge faced by Iberia".  IAG is run as a separate unit from BA at the Compass Centre, Heathrow. www.iairgroup.com

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