Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Iberia Loses €165M In The First Half Of 2009  
User currently offlineIBERIA747 From Spain, joined Aug 2003, 1831 posts, RR: 58
Posted (5 years 2 months 3 weeks 6 days 21 hours ago) and read 3757 times:

Iberia have released their results for the 2nd quarter/1st half of 2009.

During the 2nd quarter the airline has recorded a €72,8M loss, to achieve a consolidated loss of €165,4M during the first half of the year.


According to the report, "the airline’s financial and liquidity situation is still robust, with an adjusted liquid balance of €2,240.7 million, just 1.4% less than at close of 2008 and with a slight 2.8% increase in adjusted net debt."


Heres the link to the full report (Spanish and English available):

http://grupo.iberia.es/portal/site/g....574eeefb30d7d3be19736c10d21061ca/

[Edited 2009-08-28 03:04:12]


¡¡VIVA ESPAÑA!!
11 replies: All unread, jump to last
 
User currently offlineSumma767 From United Kingdom, joined Mar 2004, 2565 posts, RR: 6
Reply 1, posted (5 years 2 months 3 weeks 6 days 20 hours ago) and read 3684 times:

This loss is bigger than was expected by analyst.
Almost 20% less revenue overall. 30% less premium passenger revenue.
Iberia did what it could to stem the losses, in that capacity was successfully controlled and load factor in long haul flights only decreased 2 or 3 percentage points, whilst increasing slightly in short haul flights.
Worrying that that there is no recovery in sight in premium traffic.

Whilst Iberia is still in a good position in terms of cash, the prospects for healthy future earnings are far from rosey if its stays on its own.The merger with BA -or other- should be the next step.


User currently offlineCharles79 From Puerto Rico, joined Mar 2007, 1331 posts, RR: 6
Reply 2, posted (5 years 2 months 3 weeks 6 days 16 hours ago) and read 3577 times:



Quoting Summa767 (Reply 1):
Almost 20% less revenue overall. 30% less premium passenger revenue.

I think these numbers tell the story rather well. A significant drop in revenue not accompanied by a similar drop in costs (due to the high operating costs nature of the airline business) is a near guarantee for a loss.

They do talk about a Contingency Plan being put into action but don't go into great details in regards to expectations for the rest of the year. Are more plane groundings in the cards for IB beyond the deferred A346 deliveries of this year? Do they expect to see the premium passengers return to the same cabin, or they foresee them staying in Y for the near future? And if that's the case, how premium heavy are their aircraft configurations relative to their competition (LA/AF/BA/LH)?


User currently offlineUsdcaguy From United States of America, joined Jan 2004, 988 posts, RR: 2
Reply 3, posted (5 years 2 months 3 weeks 6 days 15 hours ago) and read 3538 times:

These results do not seem out of line with the declines seen by other carriers, even if the losses seem substantial. The only concern would be whether Iberia's cuts of 6% are sufficient to match supply with the 20% drop in demand. It would seem that further cuts would be needed in order for the carrier to raise average fares. Also, how are Iberia's staffing levels in light of the revenue reductions?

User currently offlineKiwiandrew From New Zealand, joined Jun 2005, 8601 posts, RR: 13
Reply 4, posted (5 years 2 months 3 weeks 6 days 15 hours ago) and read 3530 times:
Support Airliners.net - become a First Class Member!



Quoting Usdcaguy (Reply 3):
The only concern would be whether Iberia's cuts of 6% are sufficient to match supply with the 20% drop in demand.

I suppose it could depend whether the drop in demand is consistent across the network or whether some routes have had a greater drop than others in which case the 6% capacity drop might take care of more than 6% of the traffic drop ?



Moderation in all things ... including moderation ;-)
User currently offlineIberia747256B From Spain, joined May 2009, 24 posts, RR: 0
Reply 5, posted (5 years 2 months 3 weeks 6 days 14 hours ago) and read 3461 times:



Quoting Usdcaguy (Reply 3):
Also, how are Iberia's staffing levels in light of the revenue reductions?

Well Iberia has been reducing its staff levels since around 2000 so the number of employees since that year has been progresively declining to around 22000 this year, I´m not sure of the exact figures, and planned to reduce around 2000 this year with early retirements , etc, also the airline hasn´t recruited any pilots in 6 years, actually the last entry exams were held 8 years ago, and the last pilots hired 6 years ago, so the number of pilots has been reduced from 2000 to around 1600, without laying off any, so in that sence Iberia has a lot of room to reduce capacity even more, and Iberia has also not renovated the contract of many FA´s wich hadn´t a fixed contract, so Iberia´s problem isn´t exactly over-staffing.

Quoting Charles79 (Reply 2):
Are more plane groundings in the cards for IB beyond the deferred A346 deliveries of this year?

In fact Iberia has grounded for this year maybe more 5 A320´s, that is owned by the company, and not counting the 2 A319´S at Hamburg and the 2 A320´s at Toulouse, of course then there are the deferred A346 but Iberia has finally taken 1 of the A346 in Toulouse to active duty, don´t know if its been done , but it was schedule for this year finally.

Quoting Charles79 (Reply 2):
And if that's the case, how premium heavy are their aircraft configurations relative to their competition (LA/AF/BA/LH)?

Well in that sence Iberia has quite an advantage, specially against BA and LH, Iberia has 2 configurations for the A340´s 1 for the A340-300 which is 42J/218Y and 1 for the A346 which is 52J/300Y and the A319/320/321´s are configurated like other European airlines all 6-abreast seating Business Class configurated acording to demand leaving the center seat clear.

Do hope they turn this around for next year.

Good day to you all


User currently offlineBullpitt From Spain, joined Mar 2004, 871 posts, RR: 8
Reply 6, posted (5 years 2 months 3 weeks 6 days 11 hours ago) and read 3389 times:

Hi all

I think part of these losses has been the extra fuel cost. Once IB stops paying for fuel at such a high rate I wonder how this will affect the end year results. We will also have to wait and see how the J class holds up or wether we haven't seen the end of this yet.

I hope to finish in the black, althouh at the moment that seems a bit to ambitious.  Big grin

by the way have any other European companies posted their results?



These are my principles but if you don't like them I have others
User currently offlineGatoVolador From Spain, joined Apr 2007, 435 posts, RR: 1
Reply 7, posted (5 years 2 months 3 weeks 5 days 22 hours ago) and read 3260 times:



Quoting Summa767 (Reply 1):
This loss is bigger than was expected by analyst.
Almost 20% less revenue overall. 30% less premium passenger revenue.
Iberia did what it could to stem the losses, in that capacity was successfully controlled and load factor in long haul flights only decreased 2 or 3 percentage points, whilst increasing slightly in short haul flights.
Worrying that that there is no recovery in sight in premium traffic.

The data were very bad, indeed. I'd say that the worse figure is the decline of demand in Business Plus. Many people still think that Iberia is mostly a "cheap" carrier, but the fact is that they have strong sales in Business Class / Business Plus and that this represents most of the profits of the airline. As soon as the airline looses this income, the costs are higher than the revenues. The worse thing is that the yields went down considerably, much more than the number of passengers itself.

The good side is that the capacity reductions helped the airline to match the needs of the passengers, and as a matter of fact, the cuts in the supply side were in line with the drop in the demand. The load factors were historical and the market share increased in the MAD-LATAM and MAD-Europe markets, which is good.

In order to fight against the adverse business cycle, Iberia implemented some months ago an ambicious contingency plan which is already working well. Right now I cannot give you precise data, but it has a strong effect on the workforce (go-ahead with some redundancy programs) and temporary fleet reductions (5 + 3 A320 stored + 2 A319 + 2 A320 + 3 A346 deffered + no exercise of the options to buy the A330). Many business units are restructuring, such as the handling business, which is becoming much more cost-effective (this unit is responsible of many losses). A satelite airline such as Air Nostrum is also restructuring, transforming itself from an "all business low-capacity (50 seats) airline" to an airline with larger aircrafts (70-100 seats), which makes the unitary costs go down.

Additionally, the management also was restructured. Mr. Enrique Donaire, general director of the airline business is leaving his post, which is splitted into two new areas: Commercial Area (in charge of revenue generation) and Production (in charge of improving the efficiency and cost-control of the airline). The first area will be controlled by Mr. López Aguilar, the former MRO director: a very clever guy who achieved to more than double the business of the maintenance business unit, passing Iberia to be the 24th MRO operator in the world to the 9th. I'm sure he will achieve to boost the revenues. He knows the business very well.

2009 will be a difficult year, but the airline will recover for sure. The yields are already starting to (slowly) raise again and it's important to notice that they faced extraordinary costs, for example:

- The strike of the pilots in the 1st quarter;
- A week of snow in MAD in January (with severe flight disruptions)
- Cost of bearing the fuel hedged in 2008
- One-time costs of starting the redundancy programs
- Iberia bears a 10% of the losses generated by BA (exogenous figure)
+ low-business cycle and much lower (premium) demand and lower yields
+ Sudden decline of the demand in MEX due to the swine flu (the demand dropped from 2 daily flights to less than 1 in one month. They now seem to slowly recover.). Also EZE hurt and secondary markets (i.e.:Montevideo). SERIOUS (very uncertain and unforeseeable) DANGERS: Flu in Spain and detection of new cases in key LATAM markets (such as Chile).
NEW DANGER: Ryanair at BCN? (Vueling already preparing itself)

Good points:

- Air Comet will probably go under. The "Air Madrid's day after" effect will probably show up again.
- Vueling is performing very well.


User currently offlineBongodog1964 From United Kingdom, joined Oct 2006, 3650 posts, RR: 3
Reply 8, posted (5 years 2 months 3 weeks 5 days 22 hours ago) and read 3253 times:



Quoting GatoVolador (Reply 7):
- Iberia bears a 10% of the losses generated by BA (exogenous figure)

I'm not an accountant, but as this is a shareholding, I don't think this will show up in the profit and loss account at IB, nor will IB's losses show at BA.

With a 20% drop in revenue, the overall loss is probably a good acheivement, IB must have kept a good control over costs for the figure to not have been far higher.


User currently offlineSumma767 From United Kingdom, joined Mar 2004, 2565 posts, RR: 6
Reply 9, posted (5 years 2 months 3 weeks 5 days 21 hours ago) and read 3215 times:



Quoting Bullpitt (Reply 6):
I think part of these losses has been the extra fuel cost. Once IB stops paying for fuel at such a high rate I wonder how this will affect the end year results

No special mention by IB in its report on fuel cost, except to say that it was a major contributor in the 9.6% reduction in costs.

I think that other factors at play are more important, such as the decline in demand, especially in business traffic.

Quoting GatoVolador (Reply 7):
009 will be a difficult year, but the airline will recover for sure. The yields are already starting to (slowly) raise again and it's important to notice that they faced extraordinary costs, for example:

- The strike of the pilots in the 1st quarter;
- A week of snow in MAD in January (with severe flight disruptions)
- Cost of bearing the fuel hedged in 2008..

Surely recovery, of sorts, will come. But comparing the figures to those of other airlines in Europe, there are still reasons to be worried:

I took the results for Q2 2009 only. That leaves behind the snowfalls at MAD and LHR, and the unofficial pilot srike at IB. It does include,of course, the effects of the swine flu in MEX. (However, being a localised problem at that stage, I would hesitate to give it too much importance -. An airline such as Copa, who serves 3 destinations in Mexico, did not attribute a significant effect on its results and turned profits for the same quarter in line with expectations).

The operating result (in millions of Euros) for AF was far the worst at -496, then IB at -130, BA at -107 and LH at a positive 52.

But in proportion to revenue, that gives an operating margin of -12.2% for IB, -9.6% for AF, -4.7% for BA and +1% for LH.
I don't think that IB has been the only one having to pay one-off costs of redundancies.
AF seems to have been the worse affected by fuel hedging, that accounted for half is operational losses.

On revenue, AF, LH and IB show a decrease of around 20%. BA's was of 12%.
LH lost money in Q1, but it is essentially out of the tunnel.
A long way to go for the rest, with BA being next in line and IB being the last.

Swine flu is a danger for the industry at large. But as far as the south cone of Southamerica is concerned, Chile included, there will be respite for the next few months.


User currently offlineGatoVolador From Spain, joined Apr 2007, 435 posts, RR: 1
Reply 10, posted (5 years 2 months 3 weeks 5 days 18 hours ago) and read 3152 times:



Quoting Bongodog1964 (Reply 8):
I'm not an accountant, but as this is a shareholding, I don't think this will show up in the profit and loss account at IB, nor will IB's losses show at BA.

I never understood why, but the latent losses / gains obtained by a company from its investments in an another company do show up in the P&L account. To me it doesn't make sense as the losses / gains are purely "virtual" until you sell the shares and you end up with a (tangible) gain / loss, but these are the rules and (under the Spanish accounting plan) the P&L account shows the latent losses / gains. I guess that maybe the rationale is to tax these potential gains.

I can imagine that in the UK it works the same way o similarly, because of the IFRS (International Financial Reporting Standards).

My doubt is whether IB already recorded these losses, because I know that these should be calculated at the end of the fiscal year but... BA's fiscal years ends in... March? April?... so I don't know if this has to be recorded by the end of BA's fiscal year of IB's fiscal year.


User currently offlineGatoVolador From Spain, joined Apr 2007, 435 posts, RR: 1
Reply 11, posted (5 years 2 months 3 weeks 5 days 12 hours ago) and read 3066 times:

Forget my last post. I was at the gym and I thought "what the hell, what I said is a nonsense". I was wrong. It's true that at the end of the fiscal year, IB records the latent gains / losses linked to BA, but it's not the financial results but the gains / losses of the financial investment. I mixed two different things.

Sorry. My mistake.


Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
Dunedin Opens First Half Of New Terminal posted Fri Sep 30 2005 12:48:56 by Pilotdude09
Today In The Adds: One Of Us? posted Sat Dec 11 2004 12:40:28 by Macc
AMR And Its $1BILLION Loss In The First Q posted Thu Apr 24 2003 01:39:27 by Atcboy73
The First Pair Of Flights By Hooters Air posted Mon Mar 3 2003 15:38:08 by Toner
Those Wicked Folks In The First Class Lane! posted Sat Nov 30 2002 22:09:04 by Delta-flyer
Owl, Yes Owl, In The APU Exhaust Of Xpressnet A300 posted Tue Oct 15 2002 10:26:02 by SJCguy
Don't Park Your Plane In The Bad Part Of Town.. posted Wed Jul 17 2002 16:17:14 by Clickhappy
Jetsgo Flies 1,200 Pax In Their First Day Of Ops! posted Thu Jun 13 2002 04:40:09 by Slawko
GF - Following IN The Foot Steps Of EK posted Thu May 31 2001 22:56:57 by GF-A330
First Photo Of Skybus A319 In The U.S posted Sun Nov 12 2006 01:45:49 by Airbrasil
Today In The Adds: One Of Us? posted Sat Dec 11 2004 12:40:28 by Macc
AMR And Its $1BILLION Loss In The First Q posted Thu Apr 24 2003 01:39:27 by Atcboy73
The First Pair Of Flights By Hooters Air posted Mon Mar 3 2003 15:38:08 by Toner
Those Wicked Folks In The First Class Lane! posted Sat Nov 30 2002 22:09:04 by Delta-flyer
Owl, Yes Owl, In The APU Exhaust Of Xpressnet A300 posted Tue Oct 15 2002 10:26:02 by SJCguy
Don't Park Your Plane In The Bad Part Of Town.. posted Wed Jul 17 2002 16:17:14 by Clickhappy
Jetsgo Flies 1,200 Pax In Their First Day Of Ops! posted Thu Jun 13 2002 04:40:09 by Slawko