IAG profits soar

IAG has seen its pre-tax profits rise 499% in its first full year of trading. The company, formed from the merger of British Airways and Iberia, saw profits go from €83 million to €499 million in a year that saw passenger revenues for the two European airlines increase 11% from €12,322 million to €13,675 million.

The results were achieved in part by demand (revenue passenger kilometres) increasing by more (7.2%) than capacity (available seat kilometres) which rose by only 7.1%.

Willie Walsh, IAG Chief Executive, said of the results: “We’re reporting a strong full year performance with total revenue up 10.4%, boosted by unit revenue improvements with good premium traffic growth. Operating profit has more than doubled to €485 million. While there is disruption in the base figures, capacity this year was up 7.1% but we remained focused on expanding profitably. This is reflected in the 3.6% increase in passenger unit revenue and 5.6 per cent reduction in non-fuel unit costs. Fuel costs, however, remain a significant issue, up 29.7 per cent with fuel unit costs up 21.4%.

“The performance of our airlines reflects the different markets in which they operate. The north Atlantic market remains strong, benefitting British Airways. However, British aviation’s competiveness is undermined by the UK government’s determination to continually increase Air Passenger Duty (APD) with the latest rise due this April. In 2011 British Airways paid almost £500 million in APD. As a result of the latest increase, the airline is reducing by around half the number of new jobs it’s creating this year and has postponed plans to bring an extra Boeing 747 back into service.

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