British Airways owner IAG reported a strong rise in full-year profit, helped by higher than expected cost savings from the BA-Iberia merger, but warned cost pressures would hit profit in 2012.
IAG, Europe's fourth-biggest airline group by market value, on Wednesday reported a 2011 operating profit of EUR€485 million (USD$651.04 million), up from EUR€225 million the previous year. Revenues rose 10.4 percent to EUR€16.3 billion.
IAG said fourth-quarter operating profit rose to EUR€34 million from EUR€6 million a year ago but that the outlook was uncertain.
European airlines are struggling as high fuel prices, weak consumer confidence in Europe and additional charges from the EU emissions trading scheme conspire to make 2012 tough.
"Higher fuel costs, weaker European markets and labour unrest will imply, for the first part of the year, a reduction in operating results when compared with the first half of last year," IAG chief executive Willie Walsh said.
"We expect the year-over-year cost pressures to reduce as we move through the second half of the year."
The BA and Iberia parent said its fuel costs rose nearly a third in 2011 to just over EUR€5 billion but that it managed to cut non-fuel costs by 5.6 percent.
BA and Iberia sealed an USD$8 billion merger in 2010, a move which helped the pair stem huge losses following the worst industry downturn in decades.
IAG said said it achieved cost and revenue synergies of EUR€74 million in 2011, EUR€64 million more than target, in its first full year since the merger.
Source: Reuters
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