Oneworld carrier Iberia cited weak first-half traffic and continued pressure on yields for an 8.7% drop in full year net profit to €146 million ($185 million).

Difficult market conditions caused by the Iraq War and the SARS crisis, along with pressure from low-cost airline competition, also affected revenue, which fell 1.7% to €4.6 billion for the 12 months to December.

In particular, passenger revenue dropped 4.3% to €3.6 billion. However, increases in all other divisions helped bolster group results, including a 0.6% rise in cargo, a 16.2% growth in handling, and a 13.9% increase from maintenance.

Operating profit for 2003 fell 35.5% year on year to €161 million. While appreciation of the euro against the weak US dollar negatively affected revenue, it helped to keep operating costs almost on par with last year – even with the rise in fuel and navigation expenses. As a result unit costs in 2003 were up 1.1%.

A strong fourth quarter with net profits of €35 million compared with net losses of €16 million for the same quarter in 2002 contributed to the full year result.

Revenue for the three months to December rose 2.9% to €1.8 billion. Iberia notes that a weak market early in the year pushed traffic recovery to the second half of 2003.

In 2003, group passenger traffic rose 4% in revenue passenger kilometres (RPKs) on a 1.3% capacity increase.

This enabling load factors to rise 1.9 percentage points to 75%, a record average for the airline.

Iberia says that its performance during the year resulted in a 63% year-on-year rise in its share price.

Source: Flight Daily News