29 October 2010
British Airways posted net profits of £107 million for the six months to September 2010, its first interim profit for two years, as revenues rose and non-fuel costs fell. Iberia posted a £64.4 million net profit for its third quarter, after a year-earlier loss of £14.22 million. The latest results are evidence of a strengthening recovery in the global airline industry that was impacted by the worldwide economic downturn.
The profits reflected steep cost cutting and came despite recent travel chaos caused by the Icelandic volcanic ash cloud in April 2010 and cabin crew strikes. In November 2010, BA and Iberia shareholders will vote on their landmark merger deal that is due to be completed in January 2011, creating the second largest airline group in Europe after Germany’s Lufthansa.
BA revenues rose 8.4% to £4.45 billion in the reporting period, while operating costs declined 1.5%. Pre-tax profit hit £158 million, compared with a year-earlier loss of £292 million and way above analyst forecasts for profit of £73 million.
Following the merger, Willie Walsh will become Chief Executive of a new umbrella company, which will control the two airlines, International Consolidated Airlines Group (IAG), while Iberia Chairman, Antonio Vazquez, will be Chairman.
In October 2010, BA launched a transatlantic alliance with Iberia and American Airlines, pledging cheaper fares and more travel choice in a new agreement for greater coordination over routes. The tie-up allows them to cooperate commercially on flights between the European Union, Switzerland, and Norway and the United States, Mexico and Canada.