Iberia Estimates 2008 Net Profit Down 90 Percent

January 28, 2009

Iberia estimated 2008 net profit dived 90 percent to EUR32 million euros (USD$42.3 million) last year as it struggled to hand on an increase in fuel prices and suffered worsening demand as the year wore on.

However in a presentation outlining its 2009-2011 strategic objectives, Europe's fifth biggest airline by value said initiatives planned during the period would add EUR450 million to core earnings (EBIT) compared to where it would otherwise have been.

Iberia said it aimed to bring core earnings (EBIT) in its transport business, which excludes its smaller maintenance and handling divisions, back towards 2007 levels when it made EUR267 million.

The carrier forecast operating revenues for next year would fall 1.3 percent to EUR5.45 billion, while costs would rise by 5.5 percent to EUR5.5 billion. A major factor in that rise were fuel costs which jumped 46 percent to EUR1.67 billion.

The carrier, which is in exclusive merger talks with British Airways, said it would cut total capacity by 1.7 percent this year, all of it on short and medium haul routes, but during 2010 it would up supply 2.9 percent and in 2011 by 5.6 percent -- almost all of it on long haul routes.

The carrier said it was targeting a margin on earnings before interest, tax and aircraft rentals of 15-17 percent in the plan's period.

Finance Director Enrique Dupuy told analysts Iberia had met its main objectives in the 2006-2008 director plan though it had yet to achieve some of its staff cost and productivity targets.