Category Archives: IAG

IAG acquires BMI from Lufthansa, Virgin Atlantic falls short

bmi (British Midland Airways) Airbus A319-131 G-DBCG (msn 2694) GVA (Paul Denton), originally uploaded by Airliners Gallery.

International Airlines Group (London), the parent of British Airways (London) and Iberia (Madrid), has won the battle with Virgin Atlantic Airways (London) to acquire BMI (East Midlands) and the valuable London Heathrow slots from Lufthansa.

IAG issued the following statement:

“Following the announcement on November 4, 2011, International Airlines Group (IAG) and Deutsche Lufthansa AG (Lufthansa) have today (December 22) reached a binding agreement for IAG to acquire British Midland Limited (bmi). The cost is £172.5 million in cash though the price is subject to significant reductions.

Bmi consists of three distinct business units – bmi mainline, bmi regional and bmibaby.

Transaction highlights:

· Acquisition of bmi for £172.5million in cash
· IAG’s Heathrow slot portfolio to increase by up to 56 additional daily slot pairs
· Lufthansa to take on bmi’s defined benefit pension scheme
· Lufthansa has the option to sell bmi regional and bmibaby before completion
· Significant price reduction if Lufthansa does not opt to sell bmibaby before completion
· Deal subject to competition clearance
· Earnings per share (EPS) accretive by 2014 at the latest
· 2015 operating profit target of €1.5 billion to increase by more than €100 million with consequent increase in EPS
· Underpins goal of 12 per cent return on capital employed by 2015
· Restructuring costs spread over three years and significantly lower in total than bmi’s current annual losses”

It is still unclear what will happen to the bmi name and brand but it is likely at some point to be absorbed into British Airways. BA, already the dominant carrier at LHR, will become even larger if this deal is approved.

What will be the competitive response by Virgin Atlantic and others?

bmi Slide Show: CLICK HERE

IAG and Lufthansa reach agreement in principle on the sale of BMI

Bmi (British Midland Airways) Airbus A330-243 G-WWBB (msn 404) MAN (Rob Skinkis), originally uploaded by Airliners Gallery.

IAG (International Airlines Group) (London and Madrid) and Lufthansa (Frankfurt) have reach an agreement in principal on the sale of British Midland Limited (BMI) (East Midlands) to IAG.

The sale and closing of the deal remain subject to conditions including a binding purchase agreement, further due diligence and regulatory clearances. It is envisaged that the purchase agreement will be signed in the coming weeks and the aim is for the transaction to be completed in the first quarter of 2012.

This is probably the end of BMI if the agreement is finalized.

BMI Slide Show: CLICK HERE

On the financial side, International Airlines Group today (November 4) presented Group results for the three and nine months ended September 30, 2011. In addition, IAG presented combined results for the nine months ended September 30, 2011 including Iberia’s first 21 days of January.

IAG period highlights on combined results:

· Third quarter operating profit of €363 million, before exceptional items (2010: €528 million)

· Operating profit for the nine months to September 30, 2011 of €451 million, before exceptional items (2010: €219 million)

· Profit before tax for the nine months of €355 million after exceptional items (2010: €63 million)

· Revenue for the nine months up 11.6 per cent to €12,263 million (2010: €10,986 million), including €146 million or 1.3 per cent of adverse currency translation

· Passenger unit revenue for the nine months up 4.1 per cent (6.7 per cent at constant currency), on top of capacity increases of 7.7 per cent

· Fuel costs for the nine months up 28.5 per cent to €3,751 million, before exceptional items (2010: €2,919 million)

· Other operating costs up 2.7 per cent at €8,061 million, before exceptional items, including €122 million or 1.0 per cent of favourable currency translation. Non fuel unit costs down 4.7 per cent, or 3.4 per cent at constant currency

· Cash down €200 million to €4,152 million (December 2010: €4,352 million)

· Group net debt down €293 million to €602 million (December 2010: €895 million)

Read the article by Bloomberg Businessweek: CLICK HERE

Will Iberia and the IAG move ahead with a new European LCC?

Iberia Airbus A320-211 EC-FDB (msn 173) (member of Oneworld) MAD (Ariel Shocron), originally uploaded by Airliners Gallery.

Iberia (Madrid) is planning to create a new low-cost carrier (LCC) subsidiary. The company is planning to assign 38 Airbus A320s to the new operation if approved by the IAG board.

Iberia’s board met yesterday to consider this option for its European short and medium-haul flights, according to El Pais and this WSJ report.

The board of International Consolidated Airlines Group (IAG) will make the final decision.

Read the full report: CLICK HERE

IAG swings to a first half profit, wants to merge TAP

British Airways Boeing 777-236 ER G-YMMI (msn 30310) YUL (Gilbert Hechema), originally uploaded by Airliners Gallery.

IAG (International Airlines Group) (British Airways and Iberia) (London) swung to a first half profit.

Read the full report from the Guardian: CLICK HERE

In other news, CEO Willie Walsh wants to acquire and merge TAP Portugal (Lisbon) with IAG according to this report by Bloomberg.

Read the full report: CLICK HERE

Is the IAG planning a bid for TAP Portugal?

TAP Portugal Airbus A320-214 CS-TNP (msn 2178) (Star Alliance) ORY (Pepscl), originally uploaded by Airliners Gallery.

The International Airlines Group (IAG) (British Airways and Iberia) (London) is planning abid for TAP Portugal (Lisbon) according to a report by the Sunday Times.

Read the full report from Reuters: CLICK HERE

TAP Portugal Slide Show: CLICK HERE

British Airways owner IAG may pursue Japan Airlines stake

JAL-Japan Airlines Boeing 767-346 ER JA654J (msn 40366) NRT (Shigeyoshi Sakaki) (new livery), originally uploaded by Airliners Gallery.

International Consolidated Airlines Group SA (IAG) (British Airways and Iberia) (London and Madrid) according to Willie Walsh and this article by Bloomberg, may consider investing in Japan Airlines Corporation. JAL emerged from bankruptcy protection on March 28.

Read the full article: CLICK HERE