Iberia airline flies into the red

MADRID: Spanish airline Iberia said Friday it plunged into the red in the second quarter as the economic crisis battered the industry, recording a net loss of 72.8 million euros (103.4 million dollars).

The national carrier made a net profit of 21.2 million euros in the same period in 2008.

Revenues plunged 22 percent to 1.07 billion euros while earnings before interest, tax, depreciation, amortization and aircraft rentals (EBITDAR) plummeted to 2.4 million euros from 135.4 million euros a year ago.

Operating costs fell 12.6 percent to 1.19 billion euros, due in part to a drop of 28.1 percent in the cost of fuel because of the decline in price of oil since last year.

The quarterly loss was slightly higher than analysts' predictions.

"The strong impact of the global economic crisis on the air transport sector continued in the second quarter," the company said in a statement.

"The air transport sector in Spain suffered an unprecedented fall in demand."

It quoted figures from the airport authority, AENA, saying that passenger numbers in all Spanish airlines fell a total of 13 percent in the first quarter.

The crisis has also hit tourism, and therefore air travel, in Spain, one of the world's top holiday destinations.

For several years, Iberia has moved to cut back on its domestic routes to concentrate on long-haul flights, in particular between Europe and Latin America, where it is a world leader.

For the past year, Iberia has been in talks with British Airways on a merger with a view to creating one of the biggest airlines in the world.

But since then, the global economic downturn has hit both airlines, complicating the talks which have also been hampered by discussions over pension funding obligations.

New chairman Antonio Vazquez told analysts Friday: "We are continuing discussions (with BA) and remain positive."

On the Madrid stock market, Iberia shares were up 2.0 percent at 1.73 euros in a market that had risen 1.02 percent by early afternoon.