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LONDON: The IAG Group, owners of British Airways and Iberia, has reported a return to net profit in 2013 of €430 million on revenues of €18.67 billion.

The result compares to the previous year's loss of €696 million on revenues of €18.11 billion.

Cargo revenue fell 11.8 percent year-on-year to €1.07 billion – or 5.3 percent of group revenue - with yields declining 5.2 percent due to what IAG describes as weak demand.

Commenting on the results, IAG CEO Willie Walsh said: "In 2013, we strengthened the group by acquiring Vueling, embarking on Iberia's transformation and enhancing British Airways' (BA) revenue performance."

Airbus A321 Iberia  A320 British Airways 5047661247BA's operating profit was £651 million, an improvement of £377 million over the prior year. The company says revenues benefited from a full year of [owning] bmi, including the redeployment of those landing rights, and cycling over the Olympic impact felt in 2012.

Iberia reported an operating loss of €166 million compared to a loss of €185 million in 2012. Walsh said a recent pay and productivity agreement between Iberia and its pilot and cabin crew unions is "key to reducing the airline's costs further and providing the foundation for profitable growth."

The low-cost airline Vueling, purchased during 2013, produced an operating profit of €137 million for the year on gross revenue of €1.13 billion. Walsh noted: "Vueling is a great asset and provides a new cultural dimension to IAG. The airline reported an operating profit of €168 million from April 2013, when we acquired it, and expanded its network across continental Europe. To increase capacity while improving profit margins is a tremendous achievement and underlines Vueling's value to the group."

IAG says current capital contracts total €8.7 billion (2012: €4.9 billion) and includes commitments until 2021 for 69 Airbus A320s, 38 Boeing 787s, 18 Airbus A350s, nine Airbus A380s, and two Boeing 777s.

This year IAG says it expects to make steady progress towards an operating profit of €1.8 billion in 2015, despite "relatively flat" unit revenue growth, based on six core strategic objectives: "leadership in IAG's main cities; leadership across the Atlantic; stronger Europe-to-Asia position in critical markets; grow share of Europe-to-Africa routes; stronger intra-Europe profitability; and competitive cost positions across our businesses."

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