The Iberia Group closed the 2004 business year with net earnings of 220 million euros, an increase of almost 51% from the previous year…
The Iberia Group closed the 2004 business year with net earnings of 220 million euros, an increase of almost 51% from the previous year, it was announced at the company’s general shareholders meeting in Madrid.
Despite the sharp increase in aviation fuel prices, and greater competition in nearly all markets, Iberia managed to improve its earnings and its financial ratios. The Spanish airline also set a new record for aircraft occupancy, as rising demand outpaced expansion of seat supply.
These results will allow the company to pay a dividend of 5 eurocents per share, 66.6% more than it paid last year. Meanwhile, Iberia’s share price rose by 11.8% in the year, closing at 2.55 euros. This adds up to profitability of 14% in the year.
Operating income increased by more than 4% to 4,805 million euros, while operating expenses grew by only 3.3% to 4,602 million euros, thanks to the implementation of the cost containment measures in the group’s strategic plan. Accordingly, operating earnings came to 203 million euros, 26.5% above those of the previous year.
Unit operating income shrank by 4.3%, in keeping with the trend of recent years, due to greater competition and lower fares. Unit operating costs declined by 5.1% in the year, and by 6.8% if fuel price hikes are excluded from consideration. Iberia’s spending on fuel rose by 17.4% in the year, notwithstanding hedging policies and the depreciation of the dollar against the euro.
Iberia’s financial position was strengthened in 2004, when its equity increased by nearly 15% to 1,646 million euros. On December 31st, liquid assets outstripped debt by 1,162 million euros.
The EBITDAR margin widened to 16% from the 15.2% posted in 2003, and ROE reached 13,3 %, representing a 31.6% improvement in the year. The operating margin also widened by 48.5% in the year, reaching 4.2%.
With regard to production, Iberia significantly expanded its capacity, adding 8.8% to total available seat kilometres (ASKs). Meanwhile, demand, measured in revenue passenger kilometres (RPKs), rose by 9.1%. This put Iberia’s load factor (seat capacity use) at 75.2%, an all-time high for the airline.
Total supply, amounting to 61,058 million ASKs, also reached a record level, surpassing that marked in 2001, just before the latest crisis hit the industry.
Along with cost-cutting measures and risk-covering policies, the improvement in productivity was also noteworthy in 2004. Employee productivity rose by 7.7% in the year, while fleet capacity utilization was 3.6% higher.
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