Stiffening competition forces Vueling losses to widen 26/02/2008 00:00

Tight competition and soaring fuel prices forced struggling low-cost Spanish airline Vueling to post a bigger-than-expected loss in 2007.

26 February 2008

MADRID - Tight competition and soaring fuel prices forced struggling low-cost Spanish airline Vueling to post a bigger-than-expected loss in 2007.

The carrier announced a loss of EUR 63.2 million compared with a loss of EUR 10.8 million a year earlier. Analysts had predicted a loss in the region of EUR 57 million. The company gave a profit warning in the summer of last year that it would not reached its targets for the year. That was followed by another warning later.

Despite that, Vueling's share price closed up 0.24 percent at EUR 8.44, well below the initial public offer price of EUR 30 per share, when Vueling became the first budget airline to be listed in Spain at the end of 2006.

"The [financial] results have been affected by strong competition, which drove ticket prices lower," Vueling said in a statement.

Vueling's sales rose by 54 percent to EUR 235.5 million thanks to the addition of new routes. However, average gross revenues per flight dropped by 8 percent to EUR 7,600 as the average ticket price dropped by 20 percent to EUR 37.7.

Vueling's leading shareholder Hemisfero said it met last year with rival Clickair to sound out its possible interest of a merger or some form of alliance.

[Copyright El Pais / Adrian Soto 2008]