Loss-making Iberia "must adapt to survive" if it is to have any future, its parent company International Airlines Group has warned as full-year operating losses at the carrier hit €351 million ($461 million).
Although the company had been in negotiations for the past three months with trade unions in order to begin a restructuring programme "no agreement was reached", says chief executive Willie Walsh as IAG released its full-year accounts. As a result of the impasse, it is proceeding with a 15% capacity cut and will slash 3,807 posts at Iberia.
The Spanish flag carrier's performance was in stark contrast to that of its sister airline British Airways, which turned in a operating profit - including operating losses of €98 million from BMI - of €347 million.
Overall, IAG recorded an operating loss for the period to 31 December of €23 million before exceptional items, compared with an operating profit of €485 million in 2011.
Its result before tax was also substantially worse than the preceding year, plunging to a pre-tax loss of €997 million from a pre-tax profit of €503 million. Exceptional items included a restructuring charge of €202 million for the Iberia transformation plan and €343 million impairment of Iberia intangible assets, IAG says.
Revenue, however, was up 10.9% for the period to €18.1 billion from €16.3 billion in 2011.
Fuel costs continued to weigh heavily, increasing by 20.4 per cent to €6.1 billion.
Walsh describes 2012 as a "year of transformation" for the carrier group as it acquired and integrated BMI in April, with minimal negative impact. It was "handled very effectively", says Walsh, and "[BA] remained focused on its overall business performance" during integration.
"We look forward to extracting the full potential and financial benefits that the BMI acquisition brings us in years ahead," he says.
BMI generated 2.1% of capacity growth and €365 million of revenue growth, while accounting for cost increases of €463 million. Total losses, including exceptions, since acquisition were €185 million.