Iberia flies back into profit

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Spanish flag carrier Iberia, which is to merge with British Airways, flew back into the black in the second quarter, posting net profits of 31 millions euros on an upturn in demand, it said Friday.

That compares with a loss of 73 million euros (93 million dollars) in the same period last year and ends of six consecutive quarters of losses, the company said in a statement.

The airline has been badly hit by the global economic crisis which savaged the travel industry from late 2008.

The company said the closing of European air space after the eruption in April of the Icelandic volcano Eyjafjoell cost it some 20 million euros in lost revenues.

Despite that, it reported a 2.8 percent rise in revenues the first half of the year to 2.27 billion euros. Earnings growth in the second quarter was 10.2 percent.

"The recovery in income was due largely to stronger demand in international markets, and especially in business traffic, but also to heightened sales efforts by the company," it said.

"However, the domestic market remained in the doldrums, leading to negative results."

The company said costs fell 5.9 percent in the first six months of the year, "thanks mainly to lower spending on fuel, reduced seat capacity and cost-containment measures."

The results were well received, with Iberia shares up 1.13 percent after the opening in a Madrid market that was down 0.51 percent.

Iberia in April signed a merger deal with British Airways to compete more effectively in the fast-consolidating aviation sector.

The tie-up will create Europe's second-biggest airline by market value after Lufthansa, combining Iberia's strong position in Latin America with BA's presence in Africa, Asia and North America.

BA has said the merger is expected to be completed by the end of the year.

© 2010 AFP

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