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Spanish carrier Iberia posts record operating loss for 2009

Reuters

02/25/2010

The airline's strict cost control failed to offset falling passenger numbers and yields as the economic crisis hit travel. Revenues slumped 19 percent to 4.4 billion euros.

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Spanish carrier Iberia posted a record operating loss on Thursday, hit by declining air travel and underscoring challenges facing the industry as the airline seeks shelter in a merger with British Airways.

Iberia said its loss before interest and taxes (EBIT) widened to 464 million euros ($629 million) in 2009, deeper than forecasts for 335 million, in what is likely to be its last full-year earnings as Spain''s national flag carrier.

The airline''s strict cost control failed to offset falling passenger numbers and yields as the economic crisis hit travel. Revenues slumped 19 percent to 4.4 billion euros.

Airlines'' yields, the revenue made on each passenger for every mile traveled, have suffered from a decline in premium travel in the global recession, which has been particularly brutal in Spain.

"Results are below forecasts, primarily on revenues which reflect the ongoing weakness in demand," Jonathan Wober, analyst for Societe Generale said.

By 0817 GMT, Iberia''s shares were down 2.18 percent at 2.2 euros, the largest decliner on the DJ Stoxx Travel and Leisure index.

Roughly a third of Iberia''s revenues come from its domestic market, further hit by low-cost carriers and the roll-out of high-speed rail, particularly on a key Madrid-Barcelona route.

The airline swung to a net loss of 273 million euros in 2009, with a 91 million euro loss in the fourth quarter alone.

The results follow recent mixed numbers from merger partner BA, which posted a surprise third-quarter operating profit, and rivals like Air France-KLM which unveiled heavier than expected losses and said more was to come.

Iberia will host a news conference at 0945 GMT, with focus on any guidance for a recovery in demand and prices and a timetable for its merger with BA.

BA and Iberia plan to seal a definitive agreement in the first quarter to create the world''s third largest airline by revenue. BA shareholders will have 55 percent of the new company and Iberia shareholders 45 percent.


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