Iberia A340-600. By Rob Finlayson

International Consolidated Airlines Group (IAG), parent company of British Airways (BA) and Iberia (IB), reported a pre-tax loss of €263 million ($340.5 million), worsened from a €47 million loss in the year-ago period, despite revenue rising 7.8% to €3.9 billion. Passenger unit revenue for the period was up 8.5%, on top of capacity increases of 0.6%.

Fuel costs for the quarter rose 24.9% year-over-year to €1.4 billion.

IAG chief executive Willie Walsh said fuel was the main factor for the quarter's loss, although the strike by IB pilots protesting at the introduction of low-cost operation Iberia Express cost €25 million.

He said BA continues to benefit from strong demand through London, particularly in premium cabins and across the North Atlantic. IB, by contrast, affected by euro zone woes, was experiencing weakening demand at its Madrid hub.

Walsh said the Group’s financial performance “continues to be undermined by government actions. In addition to the UK government increasing the world's highest aviation tax—Air Passenger Duty—by double the inflation rate, the Spanish government plans to increase departure taxes from Spain by up to 10 euros per passenger.”

He expects operating results for the full year to be “around the breakeven level.”

In April the Group completed the purchase of bmi but Walsh said "bmibaby is not part of our plans and consultation has started with trade unions on proposals to review future options for the business” (ATW Daily News, May 7).

He also announced that "bmi regional has been sold to Sector Aviation Holdings Ltd.”