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BA owner IAG records £199m loss
The owner of BA International Airlines Group (IAG) has posted operating losses of 199 million pounds
Spain's economic crisis and the "deep and structural" problems of its main airline have plunged the owner of British Airways into the red.
A further rise in fuel costs added to the pain as International Airlines Group (IAG) - formed from the 2011 merger of BA and Iberia - posted operating losses of 253 million euros (£199 million) for the six months to June 30, compared with profits of 88 million euros (£69 million) a year earlier.
While steady trading conditions helped BA make an operating profit of 13 million euros (£10.2 million), Iberia's losses deepened to 263 million euros (£206.9 million).
IAG had been expecting to break even this year but with the debt-laden Spanish economy expected to contract this year and next, it is now forecasting a small operating loss for 2012.
Chief executive Willie Walsh said there was a "stark difference" in the performance of the two subsidiaries.
He is working on a restructuring plan for Iberia, which is likely to include short-term downsizing, network reshaping and "re-evaluation of all aspects of the business". He warned that job cuts were inevitable.
Mr Walsh said: "Iberia's problems are deep and structural and the economic environment reinforces the need for permanent structural change."
Iberia generates 27% of the group's turnover, with half of this coming from Spain, while British Airways derives only around 5% of its revenues on routes to Italy, Spain, Portugal and Greece.
The region's difficulties have prompted IAG to establish a eurozone crisis management group, which meets every two weeks to review progress. IAG shares opened 5% lower.
BA and Iberia have retained their brands in the merger, which is expected to save 400 million euro (£314 million) a year by its fifth year. It is now the third largest scheduled airline group in Europe and the sixth largest in the world, based on revenues.
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