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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.

Nomura Buy 486.70 486.70 465.00 550.00 Retains

Iberia Investor Seminar

19 Dec 14 Credit Suisse Outperform 471.80 654.00 654.00 Reiterates
19 Dec 14 Liberum Capital Buy 471.80 600.00 600.00 Reiterates
19 Dec 14 Cantor Fitzgerald Hold 471.80 470.00 470.00 Reiterates

Just for info - I don't hold either these or Ryanair.

By
Thao Hua
www.wsj.com


They are already flying high, but budget airlines could gain more altitude thanks to lower oil prices.

Jet fuel is correlated with crude oil prices, which are down about 45% this year. But the nitty-gritty of different business models determines how much of the savings from lower oil prices filters through to the bottom line.

One factor is hedging: airlines who hedged a larger proportion of oil costs won't gain as much because they’ve already locked in higher prices. U.S. carriers tend to hedge less of their jet fuel costs than European counterparts and benefit more from fuel costs being priced in dollars, analysts say. European carriers can also lock in foreign exchange rates, but that comes at an additional cost.

Within Europe, another group that stands to do well is budget airlines. As fuel becomes a smaller proportion of the total cost for carriers, budget airlines’ lean operating model could give them more bang for their operational buck.

Next year, fuel should account for about 26% of the global sector’s total operating costs compared with 30% in 2013, according to industry body IATA. But for budget airlines, that figure is usually higher. Take Ryanair. Fuel costs account for nearly 45% of its operating expenses. That means fuel savings translate into a larger boost to pretax profit.

There may be another benefit for budget airlines—if lower oil prices are here to stay. These cut-price carriers could push ahead with low-cost growth. Ryanair, for instance, added four new bases and 57 new routes in the six months to September while unit costs fell 2%, mainly thanks to lower oil prices.

Meanwhile, discretionary spending—and leisure travel—tends to increase with lower oil prices. That should also disproportionately benefit budget carriers. On the other hand, some sectors such as energy companies could suffer, squeezing corporate travel budgets. That is more likely to hurt carriers such as IAG—the group that owns British Airways, which is more dependent on business travel for growth.

From the Telegraph

There are several reasons to think that shares in IAG, the parent group of British Airways, could take off next year.

Firstly, and most obviously, there is the plummeting oil price, which has nearly halved since June to around $60 (£39) a barrel. For airlines whose biggest cost is jet fuel, then the benefits are huge. They are built to profit at $120 barrel, so imagine how much money you can make at $60, or if oil falls much further, which some experts think it will. With shares in IAG only having risen by 18.7pc this year, it appears the market has yet to fully factor in this benefit.

Secondly, IAG is trying to buy Aer Lingus. It has had one approach rejected, but is expected to make a fresh approach. A deal won’t be easy to pull off but the City would like to see it happen and the chief executive Willie Walsh is capable of doing it. Aer Lingus has 23 valuable landing slots at Heathrow, a lucrative business flying passengers across the Atlantic, and hundreds of millions of euros sitting on its balance sheet.

Five years ago BA merged with Spain’s Iberia to form IAG. It has taken that long for the real benefits of the deal to filter through, but they are finally starting to show and analysts at Liberum reckon that the market has been slow to recognise that. The broker says there is potential for a re-rating of the shares and has slapped a buy recommendation on the stock with a 600p target price. They currently trade at 475.4p.

New high @500p.

Bought first thing saw it was on the verge of a breakout.

i already hold .... and ditto EZJ which is also ticking along
strangely, FLYB which i don't hold, is doing nothing

btw, OCDO has been and continues to be a cracker

Bought on the breakout, jet fuel only getting cheaper.

just as importantly, it now looks likely to stay low (say $40/70) for some time ahead

and at the petrol pump, our local price is now <110 and will probably fall further

Been long since @279 :-)

101 for diesel here on Saturday


but that was with my clubcard offer......

101 for diesel ??????
are you running on illegal red?

Still looking strong - high 502p.

StockMarketWire.com

International Consolidated Airlines Group - the holding company of British Airways and Iberia - carried 5.8 million passengers in December, an increase of 10.8% on a year ago.

For the full year 2014, the group carried 77.3 million passengers - an increase of 10 million passengers or 15.0% on the previous year.

Group capacity measured in available seat kilometres increased by 4.5%.

Group premium traffic for the month increased by 3.4% compared to the previous year.

At 3:15pm: (LON:IAG) International Consolidated Airlines Group share price was -3.8p at 477.4p


Story provided by StockMarketWire.com

British Airways Owner IAG’s Second Aer Lingus Offer Spurned
By Kari Lundgren Jan 9, 2015 7:17 PM GMT 2 Comments Email Print

British Airways owner IAG SA (IAG) said it lifted its bid for Aer Lingus Group Plc (AERL) at the end of last month and and was rebuffed again by the Irish carrier’s board.

The adjusted proposal, made on Dec. 29, was a cash offer worth 2.40 euros ($2.84) a share, 10 cents more than the first two weeks earlier, London-based IAG said in a statement today. The latest approach values Aer Lingus at 1.28 billion euros.

Buying the Irish carrier would help swell IAG’s bank of scarce take-off and landing positions at London Heathrow, Europe’s busiest hub, where British Airways is the No. 1 carrier. The company, which acquired the former British Midland to gain slots, would need to broker a deal with 30 percent shareholder Ryanair Holdings Plc (RYA), which saw its own takeover bids for Aer Lingus blocked. IAG would also need to come to terms with the Irish government, which controls 25 percent.

“There can be no certainty that any further proposal or offer will be forthcoming,” said IAG, as International Consolidated Airlines Group SA is known. “A further statement will be made if and when appropriate.”

Aer Lingus closed up 10 percent at 2.50 euros in Dublin today -- 10 cents above the offer price. The stock has risen 37 percent since Dec. 17, the day before the first proposal became public, giving the airline a market value of 1.34 billion euros.

Other interested buyers might include Gulf carrier Etihad Airways PJSC, which owns 4 percent of Aer Lingus, and Virgin Atlantic Airways Ltd. in combination with Delta Air Lines Inc. (DAL), Goodbody analysts said in December

Bloomberg news

.

There you go Fred.

'No certainty' of improved IAG bid for Aer Lingus

By Phil Davies | 12 January 2015 at 08.24 GMT
0 Comments

International Airlines Group says there can be “no certainty” that it will return with another offer for Aer Lingus after a second bid was rejected by the Irish flag carrier.

The revised takeover bid from the British Airways owner was made at the end of December was for €2.40 (£1.88) per share against the €2.30 offered previously.

Activist Aer Lingus investor Crystal Amber, which holds a 2.8% stake, called on IAG to raise its bid to €3 a share, valuing the carrier at €1.6 billion.

“We think the board of Aer Lingus was absolutely right to reject an offer at €2.40,” Richard Bernstein, investment adviser at Crystal Amber, told the Sunday Telegraph.

He said that the Dublin-based airline was worth a “minimum” of €2.75 a share and that IAG could be forced as high as €3.

Bernstein expects IAG to return again with a sweetened third offer.

“When [IAG boss] Willie Walsh bid for Vueling he bid €7 initially which was rejected, and then he paid €9.25 in the agreed deal so there’s a bit of a precedent,” he was quoted as saying.

Bernstein previously urged IAG to offer €2.60 a share, but said that in the light of last Thursday’s strong fourth-quarter trading update from Aer Lingus, such a bid would be “insufficient”.

The airline said operating profit for 2014 would surpass the €61.1 million it reported a year earlier and that it had boosted fuel hedging to benefit from falling fuel prices.

Revealing that its latest offer had been rejected, IAG said on Friday: “There can be no certainty that any further proposal or offer will be forthcoming. A further statement will be made if and when appropriate.”

A successful bid for Aer Lingus would see IAG gain more precious take-off and landing slots at Heathrow. But any acquisition would require the backing of Ryanair which owns 29.9% of its Irish rival, and has itself tried and failed to take it over.

The Irish government owns 25% of Aer Lingus and would also have had to agree the deal.

Travel Weekly