Spanish airline Iberia saw its core earnings (EBIT) tumble 98 per cent in the first nine months of the year, it said yesterday, as its fuel bill jumped and economic gloom at home and abroad hit demand.
Operating profit (EBIT) at British Airways' merger partner fell to €6.1 million ($7.7 million) from €304 million a year ago in the third quarter, just as oil prices spiked to record highs near $150 a barrel.
The result was just shy of the €8.2 million forecast by a Reuters survey of 10 analysts.
BNP Paribas analyst Geoff van Klaveren said Iberia's fuel bill, which rose €374 million to €1.2 billon in the nine months, was higher than expected.
“They obviously fixed the fuel for Q3 near the top of the spike,” Mr van Klaveren said, noting he had a “neutral” rating on the stock rather than “underperform”, in part thanks to the Spanish carrier's strong balance sheet.
In a sign of gathering storm clouds over the sector, Iberia said passenger traffic fell 8.6 per cent in October, accelerating August and September's declines after traffic in Spain - whose economy is braking hard - fell by more than a quarter as Iberia cut capacity.
“Iberia says this fall is compensated by higher yields but there is probably only a limited time that can continue given the way the economic climate is going,” Mr van Klaveren said.
At 10.02am, Iberia shares were flat at €1.71 compared with a 0.47 per cent drop in the IBEX-35. Iberia shares have fallen 19 per cent in the last three months.
In contrast to shaky demand across most of Europe, soon-to-be-privatised Czech Airlines (CSA) told Reuters it had not felt any dramatic impact from the economic crisis and was on track to meet its break even target this year.