More Problems for British Airways Owner IAG

LONDON -- International Airline Group (ISE: IAG.L) , the owner of British Airways and Iberia airlines, warned that it expects to make a small operating loss this year.

The airline group said it swung into an operating loss in the second quarter, which resulted in a pretax loss of 390 million euros for the half-year, compared with a profit of 39 million euros the prior year. Revenue for the first six months rose 9.8% to 8.5 billion euros.

IAG said: "There remains a stark difference in the performance of our subsidiaries. British Airways made an operating profit despite rising fuel prices while Iberia's losses deepened."

It added: "Iberia's problems are deep and structural and the economic environment reinforces the need for permanent structural change. We are currently working on a restructuring plan for Iberia which we anticipate will be finalised by the end of September."

The airline warned that the restructuring plan for Iberia could lead to further restructuring costs in the latter part of the year, saying: "This is likely to include short-term downsizing, network reshaping to deliver higher unit revenues and a re-evaluation of all aspects of the business to deliver competitive costs and service to enable long-term profitable growth. Inevitably, we will not be able to avoid job losses as part of this process."

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