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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.

18 Aug 15 Credit Suisse Outperform 551.25 750.00 750.00 Reiterates

Somewhat academic in the current market!

Nomura Buy 539.00 539.00 700.00 750.00 Retains

Skinny,

Dreams, dreams!

Barclays Capital Overweight 517.75 - 750.00 Resumes

.

AUGUST 2015 - IAG GROUP TRAFFIC AND CAPACITY STATISTICS


§ Group traffic in August, measured in Revenue Passenger Kilometres, increased by 8.6 per cent versus August 2014; Group capacity measured in Available Seat Kilometres rose by 6.1 per cent.

§ Group premium traffic for the month of August increased by 8.7 per cent compared to the previous year.

more....

Deutsche Bank Buy 569.50 569.50 480.00 760.00 Reiterates

Barclays Capital Overweight 569.50 569.50 750.00 750.00 Resumes

Friday, October 30, 2015 Q3 results.

Credit Suisse Outperform 583.50 583.50 750.00 852.00 Reiterates

Five month high @594.50p.

Positive - Director/PDMR Shareholding

Why the drop?

Due to oil prices?

a general downgrade on airlines from Credit Suisse on the basis of a steady recovery of oil prices from their lows

Steady chart, cheap oil (assuming they haven't hedged too far ahead) and brokers all pretty upbeat....TP 750p from most of them. Yield is a bit on the skinny side for me!!!!

Oi!

SEPTEMBER 2015 - IAG GROUP TRAFFIC AND CAPACITY STATISTICS

§ Group traffic in September, measured in Revenue Passenger Kilometres, increased by 13.9 per cent versus September 2014 (up 4.7 per cent on a pro-forma basis); Group capacity measured in Available Seat Kilometres rose by 13.7 per cent (up 4.4 per cent on a pro-forma basis).

§ Group premium traffic for the month of September increased by 1.6 per cent on a pro-forma basis.

Down 5%!!!!

StockMarketWire.com
International Consolidated Airlines Group's third quarter operating profit €1,250 million before exceptional items (2014: €900 million), excluding Aer Lingus €1,205 million.

Revenue for the quarter up 15.2% at €6,756 million

Passenger unit revenue for the quarter up 6.5%. Excluding Aer Lingus and at constant currency down 3.3%

Fuel unit costs for the quarter down 8.6%, down 19.7% at constant currency.

Non-fuel unit costs for the quarter were up 5.6%. Excluding Aer Lingus and at constant currency down 3.5%.

Operating profit for the nine months was €1,805 million before exceptional items (2014: €1,130 million), up 59.7%, excluding Aer Lingus and exceptional items €1,760 million

Cash of €6,786 million at September 30, 2015 was up €1,842 million on 2014 year end, including €958 million from Aer Lingus.

Adjusted gearing down 2 points to 49 per cent and adjusted net debt to EBITDAR improved 0.1 to 1.8 times.

IAG chief executive Willie Walsh said: "We're reporting strong quarter results with a positive contribution from all of our airlines. IAG made an operating profit before exceptional items of €1,250 million, up from €900 million last year.

"Our passenger unit revenue showed a better trend than in the second quarter of the year and our cost performance remained strong.

"We're delighted to announce IAG's first dividend payment of 10 euro cents per share. For the full year we expect to pay out 25 per cent of our underlying profit after tax in dividends and plan to announce a proposal for a final dividend for 2015 when the full year results are published.

"Aer Lingus made an operating profit of €45 million since it joined IAG on August 18. While the airline's profitability is seasonal, Aer Lingus is cost-effective and provides a natural gateway to build our business between Europe and North America. It's a great asset for the Group."

At current fuel prices and exchange rates, IAG expects to generate an operating profit between €2.25 billion and €2.3 billion for the full year, excluding Aer Lingus.

DeutscheBank comment:
"IAG has reported its third quarter results this morning and our first take is that they are in-line. Expectations of a strong Q3 have been met; IAG has reported Q3 EBIT of E1250m (E1 205m ex-Aer Lingus); the E1205m is in-line with DBE E1 204m and consensus E1 190m. In Q3 (pre-AERL, consFX) passenger unit revenues were down 3.3% (Q2 down 6.6%) against ex-fuel unit costs down 3.5% (Q2 down 6.9%). As is normal at this juncture, IAG has firmed up FY15 EBIT guidance (ex-AERL) to E2250m to E2300m (previously E2200m+). In our view this is broadly in-line with sell-side expectations (DBE E2344m/consensus E2190m), albeit peer results suggest investors may be ahead of this. Aer Lingus was acquired on 18th August 2015 and has contributed E45m of operating profit to date but in Q4-14 lost E31m and so it is reasonable to assume its impact on group FY15 EBIT will be negligible.
In its statement IAG has not given much indication of its Q4/Q1 outlook and so its presentation and conference call will be closely followed at 0900 UKT. Our first glance at the presentation suggests FY15 fuel bill guidance is unchanged at E6.0bn but this now includes AERL as well so there is a small implicit cut. Q4 capacity growth at the group level has been cut from 4.6% to 4.1% with marginal cuts at BA and VY against a slight increase at IB. The Q3 ASK/RASK mix suggests a much improved QoQ pan-network consFX RASK performance with Domestic and Europe particularly strong. The North Atlantic also appears to still be performing very well. Overall, we believe IAG has met the base of expectations ahead of its annual capital markets day on the 6th of November.
Other points: In our view management is unlikely to shed too much light on major strategic issues and will instead address these fully at the capital markets day next week. We believe the focal points will be (i) what IAG plans to do with its excess cash generation, (ii) a strategic update on Aer Lingus and (iii) capacity/capex. On the 2015 dividend, we note the approved interim of E0.10 yesterday which suggests a 50:50 interim:final split going forward if we assume a FY15 25% payout ratio.
Performance into results, valuation: IAG shares have been broadly flat over the last month versus (post yesterday’s movements) LHA +11%, AFKLM -4%, EZJ -3% and RYA flat. It trades on below 8x 2016 PE and 3.7x 2016 EV/EBITDAR. We believe IAG is one of the best opportunities in the sector."

02 Nov 15 Barclays Capital Overweight 580.75 750.00 750.00 Reiterates

02 Nov 15 Beaufort Securities Buy 580.75 - - Upgrades

02 Nov 15 Deutsche Bank Buy 580.75 - 760.00 Reiterates

02 Nov 15 Jefferies International Buy 580.75 700.00 700.00 Reiterates