International Consolidated Airlines Group (IAG) widened its first quarter losses reflecting the costs of restructuring its Spanish carrier Iberia.
The parent company of British Airways reported an operating loss of €278m, before exceptional items, up from the previous year's €249m loss.
IAG blamed an exceptional charge of €311m for the reorganisation of Iberia.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Revenues were also broadly flat, increasing just €0.55 to €3.93bn from €3.91m.
Passenger unit revenue was, however, up 3.9% on capacity decreases of 2.1%.
Fuel costs for the quarter fell 3.4% to €1.3bn while fuel unit costs were down 1.5%.
The group ended the period with cash of €2.8bn, a reduction of €76m, but shed €157m off net debt to €1.7bn.
Chief Executive Willie Walsh said he was pleased with the results despite further losses in the quarter.
"We're reporting an operating loss of €278m this quarter before exceptional items, which at constant currency was €38m better than last year," he noted.
"Total revenue was up 0.5% and costs up 1.2%. These results are encouraging with underlying revenue strength in strategic markets however while the first step towards restructuring Iberia has been taken, there is more work to be done."
IAG acquired an additional 44.66% in Vueling during the period, bringing the group's total shareholding to 90.51% of the Spanish airline.
The company also placed orders for 18 Airbus A350 and plan to convert 18 Boeing 787 options into firm orders for British Airways.
Delivery slots for A350 and Boeing 787s were secured for Iberia which will be converted into firm orders once the airline is restructured and is well placed to grow profitably.
"Current trading is in line with our expectations," Walsh added.
"For 2013, excluding Vueling, we expect to reduce group capacity by 1.8%, and keep non-fuel unit cost flat versus last year."
RD
