IAG slumps to near €1bn loss on Iberia woes

International Airlines Group, parent of British Airways, on Thursday posted a 2012 net loss of 943 million euros ($1.239 billion), hit by troubles at Spanish division Iberia and a soaring fuel bill. The loss after taxation compared with a net profit of 562 million euros in 2011, IAG said in a results statement, adding it had been hit hard by impairment and restructuring charges at Iberia. Revenues meanwhile grew 10.9 percent to 18.117 billion euros but the fuel bill rocketed by 20.4 percent to 6.101 billion euros. Before exceptional items, IAG added that British Airways had made an annual operating profit of 347 million euros -- but Iberia made an operating loss of 351 million euros. "2012 has been a year of transformation for IAG -- we bought bmi and integrated it into British Airways and initiated our restructuring of Iberia," said IAG chief executive Willie Walsh. He added: "However there was a significant impact on the results from exceptional and non-operating items... These items include provision for restructuring and impairment costs in Iberia and non-cash pension accounting requirements." IAG had revealed earlier this month that it would axe more than 3,800 jobs at Iberia, which was about 700 fewer than it had planned in November. The division has struggled as a result of Spain's weak economic backdrop. "We have embarked on a significant transformation programme in Iberia -- and these results emphasise further that the airline must adapt to survive," added Walsh. "It must stem its cash losses and adjust its cost base permanently if it is to compete with other airlines in all its strategic markets and lay the foundations for profitable growth in the future. "Despite three months of negotiations between Iberia and its trade unions, no agreement was reached on an initial restructuring plan. Therefore, we have announced that Iberia will proceed with a 15 per cent cut in capacity and has started the formal collective redundancy process which will affect 3,807 jobs." Meanwhile last year, IAG completed its takeover of Lufthansa unit bmi. It had agreed in late 2011 to buy Lufthansa's loss-making unit for £172.5 million.