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Airline Profits Nosedive Amid Fuel Hikes

(c) Sky News 2012

Britain's two leading airlines are reporting huge losses amid rising fuel costs and tough economic conditions.

Virgin Atlantic has posted a pre-tax loss of £80.2m in the year to the end of February.

The carrier, which is part owned by Singapore Airlines (SES: C6L.SI - news) made a profit of £18.5m the previous year.

Virgin blamed "sky high fuel prices", which it says have soared by a third.

The firm also said a 25% hike in air passenger duty fees contributed to the losses.

Meanwhile, the parent company of British Airways (Other OTC: BABWF.PK - news) and Spanish carrier Iberia (Madrid: IBLA.MC - news) has reported a half-year loss of 390m euro (£306m).

Last year, International Airlines Group (IAG) made a pre-tax profit of 39m euro (£30.6m).

The company also claims the huge loss is due to the rise in fuel costs, along with poor performance by its Spanish airline.

It said Iberia's operating loss totalled 263m euro (£206m), while the cost of fuel has risen by a quarter to 2,973m euro (£2.3bn).

IAG chief executive Willie Walsh said in a statement: "There remains a stark difference in the performance of our subsidiaries.

"British Airways made an operating profit despite rising fuel prices, while Iberia's losses deepened."

He added: "Iberia's problems are deep and structural and the economic environment reinforces the need for permanent structural change.

"We are currently working on a restructuring plan for Iberia which we anticipate will be finalised by the end of September."

Mr Walsh went on to confirm there will be job cuts, saying: "Inevitably, we will not be able to avoid job losses as part of this process."

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