Spanish carrier Iberia posted a record operating loss, 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 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% to €4.4 billion.
Airlines' yields, the revenue made on each passenger for every mile travelled, 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.
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 in 2009, with a €91 million 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.
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% of the new company and Iberia shareholders 45%. (Reuters)