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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.

Finally back above 160p/200ma!

Gatwick airport to study second runway plans

LONDON | Wed Oct 17, 2012 12:53pm BST

(Reuters) - Gatwick airport is studying options to build a second runway and intends to submit the findings to a government under pressure to resolve the country's air capacity crisis.

A second runway cannot be built at London's second largest airport, which moves around 34 million passengers a year through its two terminals, before 2019 under a long-standing local agreement.

However, bosses at Gatwick, owned by Global Infrastructure Partners, on Wednesday said they were now looking at the implications of building a new runway. They plan to evaluate the environmental, surface access and economic impacts of various runway options.

Burgeoning golden cross and looking for a close above 170.

Traffic Statistics October 2012

OCTOBER 2012 - GROUP TRAFFIC AND CAPACITY STATISTICS


§ In October 2012, Group traffic measured in Revenue Passenger Kilometres rose by 3.2 per cent versus October 2011 (up 1.7 per cent on a like for like basis); Group capacity measured in Available Seat Kilometres was up 2.7 per cent (up 0.8 per cent on a like for like basis).

§ Taking account of Hurricane Sandy capacity, Group capacity would have risen by 3.4 per cent on an underlying basis.

§ Group premium traffic for the month of October grew by 3.2 per cent compared to the previous year, with 3.2 per cent growth in non-premium traffic

§ Latest outlook to be provided with Q3 results on November 9th.

IAG STATEMENT ON VUELING

Following media reports, International Consolidated Airlines Group, S.A. (IAG) can confirm that it is considering making an offer for 100 per cent of the share capital of Vueling Airlines, S.A. (Vueling).

The IAG board will be considering the matter tomorrow (November 8, 2012) but no decision to make an offer has yet been reached nor, accordingly, on any of its potential terms, including in particular the price. Further announcements will be made in due course when a decision is made.

IAG's subsidiary Iberia L.A.E. Operadora, S.A. has a 45.85 per cent shareholding in Vueling.



ends

Cash tender offer - 100% of Vueling Share Capital

3rd Quarter Results

NINE MONTHS RESULTS ANNOUNCEMENT

International Consolidated Airlines Group (IAG) today (November 9, 2012) presented Group consolidated results for the nine months ended September 30, 2012 and 2011. In addition, IAG presented combined results for the nine months comparative period ended September 30, 2011, including Iberia's first 21 days of January 2011.

IAG period highlights:

• Third quarter operating profit of €270 million, before exceptional items, €301 million excluding bmi (2011: operating profit €363 million, before exceptional items)

• Passenger unit revenue up 9.1 per cent for the quarter, flat at constant currency

• Fuel unit costs up 15.4 per cent for the quarter, up 1.6 per cent at constant currency

• Non fuel unit costs before exceptional items up 8.5 per cent for the quarter, up 1.6 per cent at constant currency

• IAG made an operating profit in the nine months of €17 million, British Airways an operating profit of €286 million, and Iberia an operating loss of €262 million

• Passenger revenue in the nine months up 12.7 per cent, passenger unit revenue up 9.1 per cent, on top of volume increases of 3.3 per cent

• Fuel costs up 23.5 per cent to €4,633 million (2011: €3,751 million before exceptional items)

• Non fuel costs before exceptional items, up 10.9 per cent. Non fuel unit costs up 7.4 per cent, or 2.6 per cent at constant currency

• Cash for the nine months down €170 million to €3,565 million, net debt up €360 million to €1,508 million, adjusted gearing up 1pt to 45 per cent

IBERIA'S TRANSFORMATION PLAN

Transformation Plan Highlights:

· Stem Iberia's cash losses by mid-2013;

· Turnaround in profitability of at least €600 million from 2012 levels to align Iberia with IAG's target return on capital of 12 per cent by 2015;

· Network capacity cut by 15 per cent in 2013 to focus on profitable routes

· Downsizing its fleet by 25 aircraft - five long haul and 20 short haul.

· Reduction of 4,500 jobs to safeguard around 15,500 posts across the airline. This is in line with capacity cuts and improved productivity across the airline.

· New commercial initiatives to boost unit revenues including increased ancillary sales and website redesign.

· Discontinue non-profitable third party maintenance and retain profitable ground handling services outside Madrid.

· The transformation will be funded from Iberia's internal resources

what a great idea to merge with Iberia,Willie Walsh should be sacked.

Iberia strategy is still sound but terms now look like a mistake

The chief executive of British Airways-owner IAG has unleashed a radical restructuring plan “to save Iberia”, the Spanish airline he merged BA with at the beginning of last year.

He’s also fighting to save the rationale and reputation of that deal which saw Iberia shareholders take 45pc of the merged group. Given its mounting losses and current troubles Iberia’s shareholders look like they got the better part of that deal by far. BA is now effectively supporting Iberia and if the same merger was struck today it would justify a ratio well below 45pc.

Of course the euro crisis and Spain’s own appalling economic problems have intervened. And that, ironically, could be the thing that helps Walsh pull off his plan to cut 4,500 jobs and stem a daily cash burn of €1.7m which makes Iberia unsustainable.

As Mayor Emanuel went on to say about never letting a crisis go to waste: “And what I mean by that it’s an opportunity to do things you think you could not do before.”

Walsh has, rightly, won his reputation for achieving what others thought unachievable by rationalising BA’s once dreadful industrial relations. But he forced through the most important changes here when things were looking their worst economically. The public dislike air travel strikes at the best of times but staff striking when the country’s dole queues are lengthening are doubly unpopular.

That’s the same backdrop against which Walsh will go into battle against the Spanish unions now. He has set an aggressive deadline of January 31 to reach agreement. If not, then Iberia has warned of “more radical action which will lead to greater reduction in capacity and jobs”. Classic Walsh.

With the benefit of hindsight some will be questioning the sanity of buying Iberia. The strategy remains sound, however, given Iberia’s valuable network into Latin America.

But the terms on which the deal was done now look a mistake which is why Walsh will battle hard to turn Iberia round and prove it can be worth 45pc of the group again.
Ranged against him will be the “narrow self interest of the few” as he described the trade unions today. On his side is the rapidly deteriorating Spanish economic crisis and €3.5bn of cash on the IAG balance sheet built up to see him through exactly this sort of problem - although it won't last for ever.

Since the start of last year IAG’s shares are down nearly 40pc reflecting the fall in value suffered by the Iberian half of the merger. But more recently the IAG price has outperformed the All Share index and on today’s restructuring news was up 2.9 to 170p so the market is confident Walsh will pull this off. Given his track record, the market is probably right.

still think Walsh should be sacked, no companies can survive for long without good industrial relations with their staff.

HSBC reiterates it's Overweight and raises TP to 220p

RBC Capital Markets Upgrade to Outperform.

Iberia strike imminent.

Out performing again today.

Looking at £2 :-

Tuesday, February 5, 2013
January Traffic and Capacity Statistics

Thursday, February 28, 2013
Full Year 2012 Results

!

Strong open through 2 quid.

Now looking to close above £2 on good volume.

UBS update boosts IAG


Shares in International Airlines Group have surged this morning after UBS upgraded stock from ‘neutral’ to ‘buy’.

UBS issued the statement on hopes of a successful resolution to IAG plans to restructure loss-making carrier Iberia.

IAG, which also operates British Airways, reach an agreement on a five year labour deal with unions in December, which also saw planned strikes called off

In a statement UBS said: “Despite its share price being up over 25 per cent in 2012, IAG was the worst performing European airline share under our coverage, underperforming Lufthansa by over 30 per cent and Air France KLM by around 45 per cent.

“We think that IAG could be the laggard most likely to outperform in 2013 should it achieve the concessions the company wants from Iberia staff.”