Iberia’s third-quarter results, posted today, showed net earnings of 30.4 million euros in the quarter, despite rising fuel costs and weaker demand.
Madrid – In the first nine months of 2008, net earnings reached 51.1 million euros, 77% below the figure for the same period of 2007, due to the additional 374.2 million euros that was spent on fuel.
Operating income of 4,120.9 million euros in the first three quarters was little changed from that of the same period of last year, as the 46.9 million euro decline in passenger revenues was nearly offset by the 42.4 million euro increase in other income items. Iberia’s aircraft maintenance division alone brought in an additional 30.2 million euros in the period.
Operating expenses came to 4,137 million euros for the first three quarters, representing an increase of 220.8 million (5.6%) over those posted a year ago. This was chiefly due to higher fuel costs, which were offset in part by the cost-cutting measures prescribed in the company’s 2006-08 strategic plan, and the depreciation of the U.S. dollar against the euro. When fuel costs are excluded, Iberia’s operating expenses show a 5% decline from the same period of last year.
In the first three quarters spending on fuel accounted for 29% of total operating expenditures by the Iberia group, and for more than 36% of its transport business expenses. In the 9-month period, fuel cost Iberia a total of 1,201.4 million euros, which was 374.2 million more than in same-2007. This rise was offset in part by lower unit consumption, thanks to greater fuel-efficiency by the aircraft fleet.
Cabin Occupancy Highest Among Europe’s Network Airlines
Iberia reported an outstanding 80.8% passenger load factor in the January-September period, which was higher than those of comparable European carriers, although it was 1.2 points below last year’s record level.
Overall supply, measured in available seat-kilometres, or ASKs, rose by 1.1% through September, while passengers carried, expressed in revenue passenger-kilometres, or RPKs, fell by 0.5%. The company completed the painstaking review and optimisation of its flight programme that was stipulated in the 2006/08 strategic plan, reducing capacity on some domestic routes and their centralisation at the Madrid hub, while increasing intercontinental services and raising supply on central and eastern European routes. These changes extended the length of the average flight leg by 12.4% to 2,246 kilometres.
The long-haul segment now accounts for 63% of total RPKs, having grown by 2.8% in January-September in comparison with the same months of 2007, while supply increased by 4.9%, to yield a load factor of 85.9%.
Revenue per RPK showed a rising trend during the first three quarters of 2008. At constant exchange rates, in the third quarter the average yield from all routes was 4.2% above its level in the same quarter of 2007, while in the first two quarters the yield was 0.2% lower.
Productivity and Punctuality Gains
Employee productivity rose by 5.0% through September, and the fleet utilisation rate showed a 6.4% advance in the third quarter, and a 4.6% improvement in January-September, when it reached an average of 10 hours per aircraft/day.
Meanwhile, Iberia’s punctuality rating improved by 2.8 from same-2007, reaching 83.2% in January-September. This put the Spanish airline ahead of all other major European network carriers.
Negative Debt Position
Iberia’s balance sheet continued to show negative debt, at -1,971.9 million euros on September 30. Liquidity (short-term financial investments plus cash and other liquid assets) came to 2,531,8 million at the end of September, down by 471 million euros from the close of 2007. This was due chiefly to the distribution of the July dividend, and the purchase of British Airways stock.
Photo: Iberia
