International Airlines Group on Friday said it planned to cut jobs at its Spanish unit Iberia, whose weak performance along with soaring fuel prices sent IAG crashing into a first-half net loss.
IAG, which also owns British Airways, said it suffered a loss after tax of 251 million euros ($306 million) in the six months to June 30, compared with a net profit of 88 million euros in the first half of 2011.
The company said it was now expecting "a small operating loss in 2012" owing to Spain's weak economic backdrop, compared with a break-even result initially forecast.
The group's share price slumped on news of the bleak outlook and first-half results to trade down 4.40 percent at 152.3 pence in midday deals on London's benchmark FTSE 100 index, which was up 1.39 percent to 5,740.49 points.
"There remains a stark difference in the performance of our subsidiaries," IAG chief executive Willie Walsh said in the earnings release.
"British Airways made an operating profit despite rising fuel prices while Iberia's losses deepened.
"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.
"This is likely to include short term downsizing, network reshaping to deliver higher unit revenues and a re-evaluation of all aspects of the business to deliver competitive costs and service to enable long-term profitable growth. "Inevitably, we will not be able to avoid job losses as part of this process," Walsh added.
IAG said while BA made an operating profit of 13 million euros in the first half, Iberia suffered a loss of 263 million euros.
The group added that its fuel charges soared 25 percent in the reporting period compared with a year earlier.