BA-Iberia may raise fuel surcharges

Passengers flying with British Airways and its partner carrier Iberia are likely to face further fuel surcharges, the boss of the merged airlines said today.

Both airlines were watching the Middle East situation closely for its impact on fuel prices, said International Airlines Group (IAG) chief executive Willie Walsh.

He went on: "We are keeping the situation under review and we will adjust the fuel surcharge if we think it's necessary.

"There has been an increase in the volatility of the fuel prices over the last few weeks. It is likely that increases will be seen in the market and this will affect all airlines and will be a challenge to the industry."

Mr Walsh, formerly the chief executive of British Airways before the Iberia merger, was speaking as IAG announced financial figures today.

The combined group posted pre-tax profits of 21 million euro (£18 million) for the three months to December 31, compared with losses of 208 million euro (£177 million) a year earlier.

The return to the black came despite severe weather in the UK and a Spanish air traffic controllers strike which disrupted the airlines' operations and reduced revenues by 71 million euro (£60.4 million).

Fuel costs were up 5.2% to 989 million euro (£841.4 million) and other operating costs lifted 11.1% at 2.82 billion euro (£2.4 billion). However, IAG said revenues for the three months rose by 13.4% after capacity growth of 2.7% and improved yields.

Mr Walsh said the IAG annual fuel bill for 2010 was 3.9 billion euros (about £3.3 billion) and this could rise in 2011 to 5.1 billion euros (about £4.33 billion).

He added that IAG's long-haul business remained strong, particularly in the first-class and business class sectors, but the short-haul European market "continues to be highly competitive".

To add to BA's fuel-cost problems, the airline faces another possible strike in the long-running cabin crew dispute.

The Unite union has said voting in a fresh ballot for industrial action in their will start on March 1, with the result due on March 28.

Depending on the result, BA could face disruption to flights over the Easter period.