OAG Travel News

Airline blames fuel cost and weak demand

Iberia reported a 77% fall in its net profits for the first nine months of 2008 to €51.1m.

The Spanish national carrier said that net earnings for the third quarter also fell to €30.4m.

The airline blamed high fuel costs and weaker demand for the fall.

It said during the first nine months, fuel costs rose by €374.2m compared with the same period o in 2007, and were now 29% of its total operating costs.

Operating revenues for the nine months of €4,120.9m were "little changed" from last year, the airline said, despite an improved exchange rate with the dollar which saved €135m.

Iberia, which is in negotiations to merge with UK carrier BA, said there was a €46.9m drop in passenger revenue but this was largely off set by a €42.4m increase in other revenues.

But during the first three quarters, operating expenses rose by €220.8m (5.6%) to €4,137m, chiefly because of rising fuel costs.

Iberia said its load factor during the January-September period was 80.8%, a slight drop of 1.2% on 2007.

The airline said its long haul operations now accounted for 65% of its revenue per passenger kilometre, a growth of 2.8% on 2007. It long haul load factor was 85.9%.

Iberia said its negative debt stood at -€1,971m at the end of September while its liquidity was down €471m to €2,531.8m.

This was mainly due to shareholder dividends and the purchase of BA shares.

Iberia has a 9.07% holding in BA while the UK carrier holds 13.5% of Iberia's shares.

Visit www.iberias.es

Source: by Stanley Slaughter www.abtn.co.uk