Iberia grounds A320s, defers A340-600 in wake of second-quarter loss

Posted 31/08/2009

Iberia Group said it will ground three more A320s and postpone delivery of an A340-600 this year, bringing its full-year capacity reduction to 6% from 4.3% previously.

IB already had parked five A320s and delayed delivery of an A340-600 from October 2009 to September 2010. It made the announcement as it reported a second-quarter net loss of €72.8 million ($103.8 million) compared to income of €21.2 million in the year-ago period.

Accelerating the €200 million contingency plan unveiled in May (ATWOnline, May 13), IB intends to "cancel or postpone about half of its planned investments," with total capex this year of around €100 million. It will increase staff cuts beyond the 4.7% head-count reduction carried out since the second quarter of 2008 that has seen the workforce decline to 20,760 from 21,793. Last week it also announced the reorganization of its management structure (ATWOnline, Aug. 28).

Second-quarter operating revenue sank 22% to €1.07 billion with passenger revenue down 24.3% to €803.7 million on a 16.5% drop in unit revenue. Budget measures and savings on fuel enabled IB to show a 12.8% decline in operating expenses to €1.20 billion. Recurring EBIT was a negative €129.6 million compared to minus €4 million last year. Operating expense per ASK fell 6.5% to 7.65 euro cents. Load factor rose 1.5 points to 81.3% on a 6.6 cut in ASKs to 15.67 billion. Traffic was down 4.8% to 12.73 billion RPKs with the heaviest hit in the domestic market, off 6.2%. Long-haul traffic dropped 5.5%. Cargo RTKs plummeted 26.3% to 216 million.

The capacity cuts announced Friday will be felt most on the long-haul network, where ASKs will decline 3.6% versus 1% previously. The domestic reduction is unchanged at 10.4% and medium-haul capacity will decrease 8.9% versus 8.6% previously.

For the six months ended June 30, IB lost €165.4 million compared to income of €20.7 million in the year-ago period. Revenue declined 18.9% to €2.17 billion. Nearly a third of that shortfall was attributable to a slump in business travel, it said. Looking forward, it believes the decrease in passenger unit revenue probably has bottomed out, with margins expected to improve in the third and fourth quarters compared to the first half.

by Perry Flint

Originally published 1 Sep 2009 at: http://feeds.atwonline.com/~r/AtwDailyNews/~3/YjUGB-VwF3U/story.html