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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.

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.”

Heathrow: 2012 'busiest year on record'

Heathrow has said that it handled 70 million passengers in 2012, the highest number on record, as the crowded airport saw bigger and fuller planes.

Numbers rose 0.9% from 2011, with 3.2% growth in its staple North Atlantic business, and traffic to the Far East and Brazil boosted by new routes.

December was also a record month at the airport, with China traffic up 23%.

Who owns Dreamliners?



Air India: 6

All Nippon Airways (Japan): 17

Ethiopian Airlines: 4

Japan Airlines: 7

LAN Airlines (Chile): 3

Lot Polish Airlines: 2

Qatar Airways: 5

United Airlines (US): 6

Total: 50

Source: Boeing

220p looks a key area.

Uncrossed @218.4 the highest since mid 2011.

Clear of 220 atm @226.

Analysts at JP Morgan moved from neutral to overweight on IAG, saying:

We see the decision by Iberia unions to negotiate the details of the restructuring plan with no change to its overall targets as lowering the short-term risk of turbulence surrounding its implementation. We believe IAG shares will outperform once Iberia reaches agreement with unions (or implements unilateral cuts), and see the recent under performance as a good entry point for investors.

RNS Number : 9660W

International Cons Airlines Group

01 February 2013

IAG STATEMENT ON IBERIA TRANSFORMATION PLAN

International Airlines Group confirms that no agreement has been reached between Iberia and its trade unions over the airline's transformation plan proposals, published on November 9, 2012.

Iberia will, therefore, press ahead with the previously announced capacity reduction of 15 per cent for 2013.

IAG will also move forward on alternative plans to return Iberia to break-even, in terms of operating cash flow, by the second half of this year and restore Iberia to an acceptable level of profitability by 2015.

Willie Walsh, IAG chief executive, said: "We're disappointed that no agreement has been reached. Iberia is ready and willing to negotiate with the Trade Unions. We are determined and united to implement the necessary changes to secure the future survival and viability of Iberia".

ends