IAG airlines group flies into profit

LONDON: International Airlines Group soared back into net profit in 2013 on a strong performance from its British Airways unit and from recently-acquired Spanish budget carrier Vueling, it said Friday.
Profits after tax stood at 122 million euros ($167 million) last year also as its main Spanish carrier Iberia narrowed losses, IAG said in a results statement. IAG had suffered a net loss of 716 million euros in 2012.
Revenues grew 3.1 percent to 18.7 billion euros and fuel costs slid 2.5 percent to 5.95 billion euros.
"In 2013, we strengthened the group by acquiring Vueling, embarking on Iberia's transformation and enhancing British Airways' revenue performance," said chief executive Willie Walsh.
"This has led to a strong financial recovery and return to profitability." Group operating profit, stripping out taxes and one-off costs, stood at 770 million euros compared with a loss of 23 million euros in 2012.
BA benefited also from additional slots at London's Heathrow airport following integration of bmi, the no-frills carrier that IAG purchased in 2012 from German rival Lufthansa.
At the same time, Iberia slashed its operating loss to 166 million euros compared with 351 million euros last time around.
"Iberia has made huge progress on cost control as its restructuring takes shape and great credit should be given to all those involved," Walsh said.
He added that recent pay agreements between Iberia and its pilot and cabin crew unions were key to reducing the airline's costs further and "providing the foundation for profitable growth".
Iberia employee costs down:
Last year, Iberia's restructuring saw 2,500 staff leave the airline via a voluntary redundancy programme, while salaries were reduced by between 11 percent and 18 percent.
As a result, Iberia's employee costs were down 14.3 percent compared with 2012.
London-listed IAG also noted that Vueling was a "great asset" which had helped to increase IAG's capacity by 5.2 percent, primarily in domestic and European markets.
BA's capacity meanwhile increased by 2.0 percent after the introduction of the Airbus A380 and Boeing 787 into the airline's fleet.
"The new aircrafts' economic and environmental performance has been excellent and customers love them," Walsh said.
Looking ahead, IAG forecast that it would make "steady progress" this year towards its 2015 group operating profit target of 1.8 billion euros.
Despite the impressive annual results, IAG's share price sank on Friday as investors took the opportunity to take profits after the stock almost doubled in one year.
In afternoon deals, IAG shares price shed 3.27 percent to 437.02 pence on London's FTSE 100 index, which was 0.15 percent lower at 6,800.45 points.
"For now, IAG is progressing," said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers.
"The removal of costs remains central, with labour productivity and aircraft fuel efficiency still topping the agenda.
"Passenger revenues have again grown, whilst expected growth from Asia and Africa remains firmly in management sights."
IAG was formed in January 2011 when BA and Iberia merged in a tie-up that was aimed at slashing costs. The group has 431 aircraft in service and employs more than 60,000 people.