British Airways owner IAG swung back into profit in 2013 after a strong performance at BA and ‘huge progress’ in the restructuring of its Spanish airline Iberia.
IAG, which was created after the merger of the two airlines in 2011, posted an operating profit of €770m (£631 million) in 2013. That compared to a €23m loss the year before.
The swing back into the black was helped by BA’s financial performance, where profits were £651m, up £377m. The airline has benefitted from additional Heathrow slots and flexibility offered by the integration of BMI, the UK carrier it acquired in 2012. BA's passenger load factor was 1.4 points higher, while returns also improved 2.7% from the previous year.
Revenues were also up at Vueling, the low-cost Spanish carrier which IAG acquired in April, and its operating profit was €137m.
Troubled airline Iberia is still losing money but has halved its losses to €166m from €351m in 2012. More than 3,000 jobs have been cut at the Spanish airline as it undergoes a tough restructuring, while underperforming routes have also been dropped and remaining staff have taken a wage cut. Iberia has suffered from the economic crisis in Spain and stiff competition from budget carriers.
Total revenue at IAG grew 3.1% to €18.6bn while passenger revenue grew almost 6% to €16.2bn. Fuel costs at the group, which has 431 aircraft in service and employs more than 60,000 people, were down 2.5% to €5.95bn.
‘We have shown strong financial management this year. Despite buying Vueling and increasing our capital expenditure, cash was up €724 million versus last year and adjusted gearing was down 1 point to 50%,’ IAG chief executive Willie Walsh said.
The group is aiming to make an operating profit of €1.8bn in 2015.
IAG’s shares were down 3% to 440p in mid-morning trading.