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International Airlines Group (IAG) Fundamentals


International Consolidated Airlines Group, S.A., also known as International Airlines Group, is the name of an Anglo-Spanish holding company formed on 8 April 2010 as a result of the proposed merger between British Airways and Iberia.


The new company will be the third largest airline holding company in the world by revenue,with 419 aircraft transporting passengers between 200 destinations.The new company will carry over 62 million passengers per year, according to British Airways executives.Both airlines will, however, continue to operate under their current brand names. British Airways shareholders will take a 55% stake in the new company, while Iberia shareholders will own the remaining 45% stake.

Deutsche Bank Buy 262.35 256.40 330.00 330.00 Reiterates

Bank of America Merrill Lynch Buy 262.35 256.40 310.00 310.00 Reiterates

Liberum Capital Hold 269.55 269.60 - - Upgrades

Making new highs this morning.

Credit Suisse Outperform 277.80 269.60 295.00 328.00 Reiterates

Chart looking good skinny.

Liberum Capital upgraded the BA/Iberia operator to hold from sell today.

Deutsche Bank Buy 272.80 272.00 330.00 330.00 Reiterates

Credit Suisse Outperform 280.95 281.40 328.00 328.00 Reiterates

Deutsche Bank Buy 280.95 281.40 330.00 330.00 Reiterates

APRIL 2013 - IAG GROUP TRAFFIC AND CAPACITY STATISTICS

§ In April 2013, Group traffic measured in Revenue Passenger Kilometres decreased by 5.6 per cent versus April 2012; Group capacity measured in Available Seat Kilometres was down 2.9 per cent.

§ Group premium traffic for the month of April increased by 1.8 per cent compared to the previous year. Non-premium traffic decreased by 6.9 per cent.

§ Traffic and load factor were affected by Easter and a Group policy to improve unit revenues through yield, rather than load. To look through the Easter effect, it is necessary to aggregate March and April. In doing so, load factor reduction was 0.6 points, premium traffic increased by 0.6 per cent and non-premium traffic decreased by 3.2 per cent.

§ Underlying market conditions remain unchanged from those described at the publication of Quarter Four results on 28th February.


May 8th, 2013

1st Quarter Results

THREE MONTHS RESULTS ANNOUNCEMENT

International Consolidated Airlines Group (IAG) today (May 10, 2013) presented Group consolidated results for the three months to March 31, 2013.

IAG period highlights:

§ First quarter operating loss of €278 million, before exceptional items (2012: €249 million loss)
§ There was an exceptional charge of €311 million in the quarter, principally relating to restructuring at Iberia (2012: €37 million exceptional
credit)
§ Revenue for the quarter up 0.5 per cent to €3,939 million (2012: €3,919 million), including €46 million or 1.2 per cent of unfavourable
currency impact. Passenger unit revenue for the quarter up 3.9 per cent (5.3 per cent at constant currency), on capacity decreases of
2.1 per cent
§ Fuel costs for the quarter down 3.4 per cent to €1,361 million (2012: €1,409 million). Fuel unit costs were down 1.5 per cent
§ Non-fuel costs before exceptional items for the quarter up 3.5 per cent at €2,856 million, including €24 million or 0.9 per cent of adverse
currency impact. Non-fuel unit costs up 5.8 per cent, or 4.9 per cent at constant currency
§ Cash of €2,833 million at quarter end was down €76 million and Group net debt down €157 million in the quarter to €1,732 million

Bank of America Merrill Lynch Buy 0.00 310.00 310.00 Reiterates

Beaufort Securities Hold 271.60 - - Retains

Deutsche Bank Buy 271.60 330.00 - Reiterates

Credit Suisse Outperform 267.70 328.00 345.00 Reiterates

IAG Convertible Bond Launch

CONVERTIBLE BOND LAUNCH

International Airlines Group (IAG) is launching a senior unsecured convertible bond offer of up to an approximate maximum amount of €400 million to fund its acquisition of Vueling, enhance liquidity and lower its cost of capital.

The bonds, which are due to mature in 2018, can be converted into ordinary shares of IAG. It is expected that the bonds' conversion price will be set at a premium of between 30 - 35 per cent with a fixed rate of interest between 1.75 - 2.5 per cent, payable semi-annually in arrears. The final size of the offer will be determined at the time of pricing which is expected to be later today. Full conversion of the bonds would increase the number of IAG shares in issue by up to five per cent.

Boeing set to confirm plans for larger 787 Dreamliner - sources

Fri Jun 14, 2013 2:20am BST
(Reuters) - Boeing Co (BA.N) is poised to launch a larger member of its 787 Dreamliner jetliner family to meet demand for long-haul travel within Asia and other long-haul routes, sources told Reuters on Thursday.

Long-discussed plans for a 323-seat version of the 787 are likely to be formally announced at next week's Paris Airshow, the sources said, confirming a Wall Street Journal report.

"We have no comment on the report but we are engaged in discussions with customers on a potential new member of the 787 family," a Boeing spokesman said.

A350: The aircraft that Airbus did not want to build

After many years on the drawing board and $15bn (£9.5bn) of investment the latest potential blockbuster from Airbus is due to make its long-awaited first flight on Friday.

The A350XWB (extra wide body) is an aircraft which Airbus says will set new standards in fuel efficiency and environmental performance.

The long-range, twin-engined plane is being pitched as a direct rival to Boeing's radical 787 Dreamliner, another airliner which claims to have taken aircraft technology to new heights.

Yet, the A350 is also an aircraft that Airbus never really wanted to build.

British Airways inaugural $927 million EETC Bond Issue

International Consolidated Airlines Group, S.A. ("IAG") today announces the successful launch by British Airways of an inaugural $927 million publicly-traded bond issue, using aircraft as collateral. These bonds are known as EETCs, or Enhanced Equipment Trust Certificates, and are a form of aircraft financing commonly used by US airlines.

I thought aircraft were leased so how can you use them as collateral?
Obviously you can, but seems to be a book keeping trick!

Merrill Lynch comment today:
"Post the sale of Bankia’s stake, we feel that one of the overhangs on IAG’s shares has been cleared and that investors can refocus more on the improving fundamentals. We are reiterating our Buy on IAG with a 310p price objective. We believe the best time to build a position in any airline is when:
 There are capacity reductions, which provides sustenance for consensus upgrades.
 The bears have a short-term red herring over which to be concerned.
 A valuation is discounting value destruction, with an uptick in CROCE.
IAG qualifies strongly under all three banners
 At IAG group-wide capacity will likely be down c.1.5% this year. Consensus upgrades are being driven by strong revenue momentum across the North Atlantic (we estimate RASK has been at c.+10% YoY in H1’13). Our group-wide FY13E EBIT forecast of €833mn is c.€200mn above consensus, driven by a c.100bp differential on yields (vs. consensus; BofAMLe +5% YoY).
 In terms of red herrings, we regard the Iberia issues as a distraction, with little value being given to the Iberia asset in the share price.
 We estimate an FY13 EV/CE multiple of 0.40x, with the business covering its cost of capital in FY15. Our 310p PO is based on an EV/CE multiple of 0.45x, which is similar to where BA traded in 2007."

Jefferies International Buy 0.00 - 320.00 Initiates/Starts

Deutsche Bank Buy 0.00 330.00 330.00 Reiterates

Morgan Stanley Overweight 0.00 - - Reiterates