Page last updated at 13:38 GMT, Friday, 27 February 2009

Iberia profits see 90% nosedive

Iberia planes
The industry has been unable to adapt enough, Iberia says

Spanish flag-carrier Iberia has blamed weak demand in the economic slowdown for a sharp drop in 2008 earnings.

The airline, which is discussing a tie-up with British Airways, said its annual net profit plunged 90% to 32m euros ($41m; 28.5m).

Soaring fuel prices through most of the year and a new high-speed train service between Madrid and Barcelona had also hit earnings, it added.

Sales were down 1.3% over the year at 5.45bn euros, Iberia said.

'Insufficient adaptation'

The airline had warned of a sharp drop in earnings last month, after it began to feel the impact of the economic downturn.

"Since the end of 2007, the air transport industry has seen a slowdown in the growth of traffic, which intensified in the second half of 2008 due to the deterioration of the international economic situation," Iberia said.

It added the sector had tried to adapt, "but in a insufficient proportion to compensate for the drop in demand".

Iberia has said that a preliminary decision on its merger with BA is likely to be made in March.

An industry body has predicted that total losses for airlines in 2008 were likely to reach $5bn because of the global economic downturn.

The International Air Transport Association (IATA) had forecast bigger losses, but revised the figures down because of lower jet fuel prices towards the end of the year as the oil price slumped.

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