Aviation

British Airways counts costs of Sandy storm

the Scotsman,

4 November, 2012

BRITISH Airways owner International Airlines Group (IAG) will lay bare the cost of super-storm Sandy on its operations during a trading update on Friday.

BA was forced to cancel more than 70 flights as the extreme weather battered America’s east coast. The storm came at a busy time for the airline, falling during the English schools’ half-term holidays.

Some of the effect of the flight cancellations will be shown in IAG’s latest traffic figures, expected to be released on Tuesday, while the group is likely to be questioned over the financial hit when it gives its third-quarter update later in the week.

The figures come after a turbulent time for the owner of BA and Spanish airline
Iberia. IAG slumped to an operating loss of €253 million (£203m) for the six months to 30 June, compared with a profit of €88m a year earlier.

IAG said this was due to Spain’s debt crisis and “deep” problems at Iberia, as well as a further rise in fuel costs. While steady trading conditions helped BA make an operating profit of €13m, Iberia’s losses deepened to €263m.

IAG had been expecting to break even this year but, with the debt-laden Spanish economy expected to contract this year and next, it said it was instead forecasting a small operating loss for 2012.

On an underlying basis, analysts at Investec Securities are forecasting a profit of €227m in the third quarter, down 37 per cent, but a €64m loss at the full-year stage.