Category Archives: IAG

IAG applies for a tender offer to acquire Vueling Airlines

International Airlines Group-IAG’s (London), the parent of British Airways (London) and Iberia (Madrid), through its subsidiary Veloz Holdco, has formally filed an application for Vueling Airlines (Barcelona) through a tender offer. IAG is seeking authorization from the National Securities Market Commission of Spain for the market offer. IAG plans to acquire 16.2 million shares of Vueling Airlines or 51.14 percent of the total shares, that it does not already own through subsidiary Iberia, which already controls 45.85 percent of the Vueling shares.

Read the full report from IAG: CLICK HERE

Vueling Airlines:

IAG plans personnel cuts at Iberia after a second quarter loss

International Airlines Group-IAG (London) (British Airways and Iberia) is planning to do a full review at Iberia next month after the Spanish unit forced the group into a second quarter loss.

Willie Walsh, IAG chief executive, made the following comments:

“We made an operating loss of €4 million in the quarter, including €50 million of bmi losses, before exceptional items. While our revenue performance was good, up 11.5 per cent, this was countered by an increased fuel bill of €314 million, a rise of 25.1 per cent.

“For the half year, we made an operating loss of €253 million, before exceptional items, with revenue up 9.8 per cent and fuel costs up 25.0 per cent.

“Our synergies programme continues apace and we remain on track to deliver our 2012 targets and €500 million annual benefits by 2015.

“While we have made specific investments for longer term commercial benefits such as the Olympic sponsorship and Master brand advertising at British Airways and the development of our Avios frequent flyer currency, we remain focused on stringent cost control across the Group.

“bmi restructuring costs accounted for most of the €38 million of exceptional items. These costs and the airline‟s losses are in line with our expectations. The integration of bmi mainline into British Airways is going well with completion due by the year end.

“There remains a stark difference in the performance of our subsidiaries. British Airways made an operating profit despite rising fuel prices while Iberia‟s losses deepened.

“Iberia‟s problems are deep and structural and the economic environment reinforces the need for permanent structural change. We are currently working on a restructuring plan for Iberia which we anticipate will be finalised by the end of September. This is likely to include short term downsizing, network reshaping to deliver higher unit revenues and a re-evaluation of all aspects of the business to deliver competitive costs and service to enable long-term profitable growth. Inevitably, we will not be able to avoid job losses as part of this process.

“There has been an excellent start made by Iberia‟s new cost effective subsidiary Iberia Express, which was profitable in its third full month of operation in June and has established an exemplary operating performance from Madrid Barajas.”

Trading outlook:

A number of factors have improved over the past three months. Underlying British Airways trading conditions remain firm and bmi integration is on track, but any benefit from an easing of fuel prices has been more than offset by the deterioration in Spanish economic conditions.

We were previously targeting a break-even operating result this year, after the impact of restructuring costs and the short term earnings drag from the bmi acquisition. However, in the light of the Spanish macro headwind, we now expect to make a small operating loss in 2012.

The Iberia restructuring plan could lead to further restructuring costs in the latter part of the year.”

Iberia:

British Airways:

IAG sells BMI Regional to Sector Aviation Holdings for $12.8 million

International Airlines Group (IAG) (London) has signed a binding agreement to sell BMI Regional (Aberdeen) to Sector Aviation Holdings Ltd (SAH) for £8 million ($12.8 million) in cash. The sale includes all of BMI Regional’s fixed assets and long-term liabilities, including owned and operating lease aircraft.

BMI Regional operates a fleet of 18 Embraer regional jets and flies to 14 destinations from UK regional airports. A name change is very likely.

The sale is conditional upon CAA approval and it is anticipated that ownership will be transferred to SAH within two weeks.

Sector Aviation is a consortium of businessmen with considerable aviation experience including the team previously referred to as Granite Aviation, led by Ian Woodley. The business is being funded by Stephen and Peter Bond who are also investors in Loganair (Glasgow).

IAG previously acquired BMI including BMI Regional and bmibaby from Lufthansa on April 20, 2012. Bmibaby remains unsold.

BMI Regional Slide Show: CLICK HERE

IAG’s first quarter loss before taxes increases to $340 million

International Airlines Group (IAG) (IAG), the holding company of British Airways (London) and Iberia (Madrid) saw its first quarter loss before taxes increase to €263 million ($340.1 million) from €47 million loss a year ago.

The group issued the following report:

International Consolidated Airlines Group (IAG) today (May 11, 2012) presented Group consolidated results for the three months ended March 31, 2012. In addition, IAG presented combined results for the three months ended March 31, 2012, including Iberia’s first 21 days of January in the comparative period.

IAG period highlights on combined results:

· First quarter operating loss of €249 million, before exceptional items (2011: €102 million loss)

· Loss before tax for the quarter of €263 million (2011: €47 million loss)

· Revenue for the quarter up 7.8 per cent to €3,919 million (2011: €3,636 million), including €40 million or 1.1 per cent of favourable currency impact

· Passenger unit revenue for the quarter up 8.5 per cent (7.3 per cent at constant currency), on top of capacity increases of 0.6 per cent

· Fuel costs for the quarter up 24.9 per cent to €1,409 million (2011: €1,128 million), fuel unit costs were up 24.0 per cent

· Non-fuel costs before exceptional items for the quarter up 5.7 per cent at €2,759 million, including €32 million or 1.2 per cent of adverse currency impact. Non-fuel unit costs up 5.1 per cent, or 3.7 per cent at constant currency

· Cash of €3,574 million at quarter end was down €161 million

· Group net debt down €19 million in the quarter to €1,129 million

Performance summary:

	Combined Three months to March 31			Consolidated Three months to March 31
Financial data € million (unaudited)	2012⁽¹⁾	2011⁽¹⁾	Higher / (lower)	2012⁽²⁾	2011⁽²⁾
	2012⁽¹⁾	2011⁽¹⁾	Higher / (lower)		(excludes 21 days Iberia pre-merger)
Passenger revenue	3,290	3,018	9.0 %	3,290	2,839
Total revenue	3,919	3,636	7.8 %	3,919	3,399
Operating loss before exceptional items	(249)	(102)	144 %	(249)	(65)
Exceptional items	37	–	nm	37	–
Operating loss after exceptional items	(212)	(102)	108 %	(212)	(65)
Loss before tax	(263)	(47)	460 %	(263)	(8)
(Loss)/profit after tax	(146)	33	(542)%	(146)	60
Basic earnings per share (€ cents)				(8.2)	3.3
Operating figures	2012⁽¹⁾	2011⁽¹⁾	Higher / (lower)
	2012⁽¹⁾	2011⁽¹⁾	Higher / (lower)
Available seat kilometres (ASK million)	51,425	51,116	0.6 %
Revenue passenger kilometres (RPK million)	39,140	37,767	3.6 %
Seat factor (per cent)	76.1	73.9	2.2pts
Passenger yield per RPK (€ cents)	8.41	7.99	5.3 %
Passenger unit revenue per ASK (€ cents)	6.40	5.90	8.5 %
Non-fuel unit costs per ASK (€ cents)	5.37	5.11	5.1 %
€ million (unaudited)	At March 31, 2012⁽²⁾	At December 31, 2011⁽¹⁾	Higher / (lower)
	At March 31, 2012⁽²⁾	At December 31, 2011⁽¹⁾	Higher / (lower)
Cash and interest bearing deposits	3,574	3,735	(4.3)%
Net debt	1,129	1,148	(1.7)%
Equity	5,739	5,686	0.9 %
Adjusted gearing⁽³⁾	43%	44%	(1pt)

(1) This financial data is based on the combined results of operations of British Airways Plc (‘BA’), Iberia Líneas Aéreas de España S.A. (‘Iberia’) and IAG the Company for the three month period ended March 31, 2012 and 2011. These combined financial statements eliminate cross holdings and related party transactions. Financial ratios are before exceptional items.

(2) The IAG March 31, 2012 Income statement is the consolidated results of BA, Iberia and IAG the Company for the three month period ended March 31, 2012. The IAG March 31, 2011 comparative is the consolidated results of BA and IAG the Company for the three month period ended March 31, 2011 and Iberia from January 22, 2011 to March 31, 2011.

(3) Adjusted gearing is net debt plus capitalised operating aircraft lease costs, divided by net debt plus capitalised operating aircraft lease costs and equity.

nm = not meaningful

Top Copyright Photo: Antony J. Best.

British Slide Show: CLICK HERE

Iberia Slide Show: CLICK HERE

Bottom Copyright Photo: Dave Campbell.

Lufthansa completes the sale of bmi, IAG to dispose of bmibaby and bmi regional

Lufthansa (Frankfurt) has sold British Midland Limited (bmi) to the International Airlines Group (IAG). The sale was completed at the close of business on April 19. The gross purchase price was approximately $277.6 million.

According to Lufthansa, “as price adjustments have been agreed as part of the transaction structure, the net purchase price will be determined at the end of the second quarter 2012, at which point the final amount will be transferred. It continues to be expected that the net purchase price will be negative. However the costs of the transaction for Lufthansa will amortize within one year. The gross purchase price is expected to be reduced by a number of items including agreed deductions for not selling bmi regional and bmibaby prior to the completion of the transaction.

Bmi’s underfunded Pension Scheme is to be transferred to the UK Pension Protection Fund. The pension shortfall for the members of the bmi Pension Scheme will be offset to a large extent by a one-off contribution from Lufthansa of GBP 84 million to a supplementary pension scheme.”

On November 4, 2011, Lufthansa and IAG agreed in principle to the sale of bmi to IAG, prior to a legally binding purchase agreement being signed by both parties on December 22, 2011. The validity of this contract was subject to regulatory approval by the European Commission, which was received on March 30, 2012.

IAG has vowed to operate bmibaby and bmi regional as subsidiaries only for the short term (Lufthansa was unable to sell either carrier prior to the sale date). IAG will now try to dispose of both bmibaby and bmi regional.

Meanwhile Virgin Atlantic Airways has vowed to continue to fight this transaction and hopes to acquire new slots at London Heathrow.

Lufthansa is now entering an austerity period where it will attempt to cut all operations that are not making a profit.

Top Copyright Photo: Antony J. Best. The bmi brand is expected to be retired very quickly by British Airways ending a long history for British Midland Airways, now operating as bmi.

bmi/British Midland Slide Show: CLICK HERE

bmibaby Slide Show: CLICK HERE

Bottom Copyright Photo: Paul Denton. What will happen to bmibaby, the airline that no one wants?

Lufthansa is having a hard time selling bmibaby

Lufthansa (Frankfurt) is having a difficult time selling off its bmibaby (bmibaby.com) (East Midlands) according to this report by Bloomberg. Two previous bidders are no longer in active negotiations to buy the low-fare subsidiary of bmi (East Midlands).

Lufthansa is under pressure to sell off bmibaby. The IAG had agreed to purchase parent bmi for $274 million from Lufthansa but negotiated a “significant” discount if Lufthansa failed to sell off bmibaby prior to the sale.

Read the full report: CLICK HERE

bmibaby Slide Show: CLICK HERE

IAG to cut 1,200 jobs at BMI

International Airlines Group (IAG) (London), the parent of British Airways (London) and Iberia (Madrid) and soon BMI (East Midlands), is planning to cut around 1,200 jobs at BMI. In order to get European Commission approvals for the acquisition from Lufthansa, BMI will drop routes and slots at London (Heathrow). Service from LHR to Cairo, Edinburgh, Moscow and Nice will be dropped. Around 1,500 BMI jobs will be retained according to this report by the Belfast Telegraph.

Read the full report: CLICK HERE

BMI Slide Show: CLICK HERE

The BMI takeover is approved by the European Commission with conditions

British Airways (London) and the IAG have won their fight against Virgin Atlantic Airways (London) for the acquisition of BMI (East Midlands) and the valuable slots at London’s Heathrow Airport. The takeover of BMI from Lufthansa (Frankfurt) has been approved by the European Commission with conditions – British Airways will have to give up 14 slot pairs at London (Heathrow). However this is somewhat mute of an issue since BA will gain an additional 42 slot pairs with the BMI acquisition. Bottom line: Virgin Atlantic loses this battle with BA and the BMI brand will quickly be replaced with the BA livery. BA/IAG is expected to close on the deal around April 20. Goodbye BMI. LHR will certainly become a BA fortress hub.

Subsidiary bmibaby will not be part of this deal.

Read the full story from The Guardian: CLICK HERE

The BBC asks the question of whether BA/IAG gave up enough for BMI: CLICK HERE

BMI Slide Show: CLICK HERE

British Airways Slide Show: CLICK HERE

Virgin Atlantic Slide Show: CLICK HERE

IAG will not have to get approval from the OFT to acquire BMI

BMI (East Midlands) will not have to face an inquiry by Office of Fair Trading (OFT) for the acquisition by the International Airlines Group (IAG) (British Airways and Iberia). The OFT has decided not to review the purchase of BMI from Lufthansa according to this article by the BBC.

The final approval of the acquisition now rests with the European Commission.

Read the story: CLICK HERE

BMI Slide Show: CLICK HERE

British Airways-Iberia operating profit doubles in the first year together

International Airlines Group (IAG) (British Airways and Iberia) (London) reported it had an operating profit of $653 million in 2011.

Here is the full report from the group:

IAG period highlights on combined results:

· Fourth quarter operating profit of €34 million, before exceptional items (2010: €6 million)

· Operating profit for the year to December 31, 2011 of €485 million, before exceptional items (2010: €225 million)

· Profit before tax for the year of €503 million after exceptional items (2010: €84 million)

· Revenue for the year up 10.4 per cent to €16,339 million (2010: €14,798 million), including €317 million or 2.1 per cent of adverse currency impact

· Passenger unit revenue for the year up 3.6 per cent (5.8 per cent at constant currency), on top of capacity increases of 7.1 per cent

· Fuel costs for the year up 29.7 per cent to €5,068 million, before exceptional items (2010: €3,907 million), fuel unit costs were up 21.4 per cent

· Other operating costs up 1.1 per cent at €10,786 million, before exceptional items, including €165 million or 1.5 per cent of favourable currency impact. Non-fuel unit costs down 5.6 per cent, or 4.1 per cent at constant currency

· Cash down €617 million for the year to €3,735 million

· Group net debt up €253 million in the year to €1,148 million

In other news, British Airways has announced it intends to introduce the new Airbus A380 in early 2013 on routes to New York (JFK), Hong Kong, Beijing and Singapore.

British Airways Slide Show: CLICK HERE