In a recent statement made by the airline, Iberia has strongly blamed the soaring costs of fuel and the weakening of demand for a significant and sharp drop in its earnings. Most notably, the airline has lost 32.2m (£25.5m; $50.2m) during the first half of the year. This is a clear contrast from the situation where the operating profits of the company were valued at 69m just a year ago. The news has come at a time when the airline is at the verge of deciding over a possible merger with British Airways. Also, Iberia has come forward to increase its stake in BA.
Iberia has recently reported that the fuel costs for the airline have gone up by 38% to 732m. It has also stated that the introduction of a brand new Madrid-Barcelona high-speed rail link and the surplus capacity in the Spanish domestic market highly affecting the number of passengers. The soaring prices of fuel has contributed to a 4.1% rise in the operating costs at Iberia, thereby offsetting a marginal increase in revenues, up 0.1%, working out to 2.6 billion. Notably, the airline has already implemented a cut back on its internal flights in addition to contemplating on further capacity cuts later in this year.
On the other hand, Ferando Conte, the Spanish airline's chairman noted that Iberia has planned to purchase more shares in merger partner BA during the forthcoming months. Also, the airline stated last week that it had a 2.99% direct stake in BA, besides a plan to increase the holding to 9.99% before the two airlines merge.
