Iberia profits up 75pc with better cost controls
2 August 2007, MADRID - Spain's largest airline, Iberia Lineas Aereas de Espana SA, said Thursday its second-quarter earnings rose more than 75 percent due to improved cost controls.
2 August 2007
MADRID - Spain's largest airline, Iberia Lineas Aereas de Espana SA, said Thursday its second-quarter earnings rose more than 75 percent due to improved cost controls.
Iberia posted net profit of EUR 62.6 million (US$85.5 million), compared to EUR 35.7 million a year earlier. The airline is currently the object of a preliminary 3.41 billion (US$4.65 billion) bid from private equity firm TPG, formerly known as the Texas Pacific Group.
Revenue fell 2.6 percent to EUR 1.36 billion (US$1.77 billion) due to the elimination of unprofitable short-haul flights.
Iberia shares rose 0.9 percent to EUR 3.45 (US$4.71), in Madrid, below TPG's non-binding bid of 3.60 (US$4.91) per share.
The airline said operating costs dropped 3.2 percent during the same comparative period to EUR 1.3 billion (US$1.77 billion), backed by staff reductions and more efficient fuel consumption as the company continued to renew its aircraft fleet.
Iberia has implemented drastic measures to lower labor and operational costs, targeting a reduction of 8 percent to 10 percent by the end of 2008.
Iberia's profitability has been under intense pressure from low-fare airlines easyJet PLC and Ryanair Holdings PLC after both companies boosted operations in Spain in recent months.
The company said its staff has been reduced by 6.6 percent, boosting productivity by 9.9 percent during the same comparative period.
Iberia is also reducing short-haul flights and focusing on long-haul routes and business-class services to widen profit margins.
TPG and its consortium partners, which include major Iberia shareholder British Airways PLC, are studying Iberia's books with a view to making a possible binding bid for the airline.
[Copyright AP with Expatica]
Subject: Spanish news