Walsh’s worries over rising costs
INTERNATIONAL Airlines Group boss Willie Walsh lambasted the Government over its ‘lack of ambition’ for Britain’s aviation industry, after reporting soaring profits at the AngloSpanish carrier.
The parent company of British Airways made £425m in 2011 compared to £71m the previous year, on revenues up 10.4pc to £13.8bn.
Cost cuts and demand for North Atlantic routes helped IAG as did the comparison with 2010, when the industry was buffeted by volcanic ash clouds and blizzards.
But Walsh warned a near 30pc rise in fuel costs, which cost IAG £1.1bn last year, would present a major obstacle in 2012.
And he warned the Coalition was piling further woe on carriers by raising air passenger duty, which cost British Airways £500m last year and is due to rise again in April.
Walsh said the extra cost had forced IAG to axe half of the 800 jobs it planned to create this year and to postpone plans to bring an extra Boeing 747 into service.
‘It’s not only damaging the UK economy’s competitiveness but it’s destroying jobs and, worse than that, the opportunity to create new jobs,’ he said.
Walsh added the refusal to consider a third runway at Heathrow meant Britain would struggle to regain its status as a key global aviation hub.
‘It’s becoming impossible to recover that. It’s inevitable the UK as an economy is going to slip down the league tables,’ he said. ‘We’re no longer going to be qualifying for Champions League, we’re satisfied with the Europa League and in a couple of years it won’t even be that,’ said Liverpool FC fan Walsh.
Iberia, BA’S partner in IAG, has been struggling due to the economic malaise in Spain and Walsh admitted this will only add to the firm’s challenges. ‘If I’m honest I can’t see many tailwinds to help us along,’ he said.
The Irishman is pinning his hopes for the Spanish business on Iberia Express, a low- cost carrier due to launch this month.
IAG (up 1p to 164.2p) also hopes to wrap up a £172.5m deal to buy BMI from Lufthansa by the end of March. It will pay a fraction of the price if a deal to sell low-cost arm bmibaby is not completed first.
Walsh said tough times in the aviation industry would throw up acquisition opportunities.
He ruled out a bid for struggling Indian airline Kingfisher but left the possibility of a deal for Portugal’s TAP open.
‘There’s enough there to justify us looking at it but I wouldn’t like you think we’ll automatically make a bid,’ Walsh added.