Spain's Iberia Loses $127 Milllion

Iberia, the Spanish airline, unveiled an emergency package of capacity cuts and layoffs after it plunged into the red in the first quarter as revenue fell sharply on lower cargo and passenger traffic.

The carrier also said a planned merger with British Airways would take longer than expected, partly because of market volatility, and partly because of its need to focus on cutting costs.

Losses in the three months to March 31 widened to $126.9 million from $548,000 a year ago and revenue declined 16 percent to $1.38 billion.

Cargo traffic plunged 22.5 percent in the quarter, shrinking revenue by over 26 percent to $87.5 million from $118.4 million. Passenger revenue fell 17.3 percent to $1.1 billion.

Iberia said it plans to save $150 million to $171 million by laying off 10 percent of its 21,500 strong payroll and cutting capacity by 4.3 percent, including grounding five Airbus A320s this month. It will postpone delivery of new aircraft and cut spending on offices and IT.

The carrier will also cut planned investments by as much as $123 million.

Iberia did not give any timetable for merging with British Airways, which would create Europe's third largest airline.

The merged carrier would have a one million tonne-a-year cargo business, fourth after Air France-KLM, Lufthansa and Cargolux.

BA and Iberia are also seeking anti-trust clearance from U.S. and European regulators to form a transatlantic joint venture with American Airlines.

Contact Bruce Barnard at brucebarnard47@hotmail.com.