International Airlines Group (IAG), Ryanair, easyJet and Wizz Air have submitted complaints to the European Commission against France as its air traffic controllers’ strikes restrict the fundamental principle of freedom of movement within the EU.
The airlines are not questioning the right to strike but believe France is breaking EU law by not enabling flights over the country during strikes. Passengers on overflights are being denied their fundamental freedom to travel between member states not affected by strike action.
So far this year, French ATC strikes have increased by 300 per cent versus 2017. Last month, the French Senate confirmed that France alone is responsible for 33 per cent of flight delays in Europe. The Senate states also that the right to strike has to be balanced against the obligation to provide public service. (*).
Willie Walsh, IAG’s chief executive, said: “The right to strike needs to be balanced against freedom of movement. It’s not only customers flying in and out of France who are affected during French ATC strikes. Passengers on routes that overfly France, especially the large airspace that covers Marseille and the Mediterranean, are also subject to delays and massive disruptions. This affects all airlines but has a significant negative impact on Spain’s tourism and economy.”
The complaints state that there is a legal precedent to this case. In 1997, the Spanish complained to the European Commission after they suffered for many years when French farmers prevented their fruit and vegetable exports into the EU. The European Court ruled against France as the French authorities didn’t address the farmers’ actions and failed to ensure the free movement of goods (**).
Michael O’Leary, Ryanair’s chief executive, said: “Europe’s ATC providers are reaching the point of meltdown with hundreds of flights being cancelled and delayed daily either because of ATC strikes or because Europe’s ATC don’t have enough staff. When Greece and Italy have ATC strikes, overflights continue as normal. Why won’t France do the same? ATC providers (especially in Germany and the UK) are hiding behind adverse weather and euphemisms such as “capacity restrictions” when the truth is they are not rostering enough air traffic controllers to cater for the number of flights that are scheduled to operate. These disruptions are unacceptable, and we call on Europe’s Governments and the EU Commission to take urgent and decisive action to ensure that ATC providers are fully staffed and that overflights are not affected when national strikes take place, as they repeatedly do in France.”
Johan Lundgren, easyJet’s chief executive, said: “We fully respect the right to strike and have been in constructive dialogue with the EU and the French government to address the issue of ATC strikes. Unfortunately, our passengers have felt little progress so far, which is why we felt it is necessary to take this next step – particularly given the sustained industrial action this year which has totalled 29 days to date.”
József Váradi, Wizz Air’s chief executive, said: “The failure of French air traffic control authorities to ensure a continued and adequate service has already caused massive disruption to the travel plans of thousands of passengers across Europe, with airlines left to pick up the pieces. Addressing this issue must be a priority for the European authorities to ensure European citizens and businesses are no longer held hostage to national industrial relations issues.”
According to Eurocontrol, more than 16,000 flights had been delayed by June this year due to ATC strikes, affecting more than two million passengers.
Last summer, the European Commission said that since 2005 there have been around 357 ATC strikes in Europe. That’s the equivalent of roughly one month per year when the EU skies are disrupted.
Top Copyright Photo (all other photos by respective airlines):
British Airways aircraft slide show: British Airways Airbus A320-251N WL G-TTNB (msn 8139) LIS (Stefan Sjogren). Image: 942707.
British Airways slide show (Airbus):
International Airlines Group – IAG (London) has announced it will acquire insolvent Niki (Vienna) for €36.5 million ($43.8 Million). IAG became the lone bidder after the Lufthansa Group pulled out of the bidding. The IAG also out bid Niki Lauda who was bidding to take back his former airline. The IAG will pay €20 million ($24 million) for Niki’s assets and provide liquidity of up to €16.5 million to Niki.
The new Niki will become a subsidiary of Vueling and the IAG will employ most of the former Niki employees (around 740). Vueling will now be able to grow its presence in Austria, Germany and Switzerland.
Niki is now likely to adopt the Vueling brand.
Copyright Photo: Niki Luftfahrt (flyNiki.com) (Airberlin) Airbus A320-214 D-ABHF (OE-LEE) (msn 2749) PMI (Javier Rodriguez). Image: 937271.
International Airlines Group (IAG) (London) has firmed up options for a further 15 Airbus A320neos. The new type will be operated by British Airways, Aer Lingus, Iberia and Vueling Airlines.
Since its launch in 2010 the A320neo Family has won 60 percent of all new orders for single aisle aircraft with over 100 seats and has been selected by over 75 airlines worldwide.
International Airlines Group (IAG) (British Airways, Iberia and Vueling Airlines) (London) has signed a firm order for 31 Airbus aircraft, which includes 11 wide-body aircraft (eight A350-900s, three A330-200s) and 20 A320neos.
The A350s and A330s are slated for Iberia’s fleet modernization and to open new long-haul routes, and the A320neos will be allocated to the group’s airlines for fleet replacement.
With this latest order for 31 aircraft IAG and its airlines have ordered a total of nearly 450 aircraft from Airbus. IAG’s airlines British Airways, Iberia and Vueling, between them operate nearly every aircraft in Airbus’ product range from the smallest single aisle A318 to the world’s largest wide-body A380.
Copyright Photo: Brian McDonough/AirlinersGallery.com. The new Airbus A330-200s for Iberia will replace the aging Airbus A340-300s and compliment the pictured Airbus A330-300s. Iberia is due to take delivery of its first Airbus A330-200 in December 2015. Iberia’s Airbus A330-302 EC-MAA (msn 1515) approaches the runway at Miami International Airport.
IAG period highlights on results:
- Second quarter operating profit €530 million ($582 million) (2014: operating profit of €380 million)
- Revenue for the quarter up 11.2 percent to €5,656 million
- Passenger unit revenue for the quarter up 5.0 per cent and down 6.6 per cent at constant currency
- Fuel unit costs for the quarter up 3.0 per cent, down 12.0 per cent at constant currency
- Non-fuel unit costs for the quarter up 3.2 per cent, down 6.9 per cent at constant currency
- Operating profit for the half year €555 million (2014: operating profit €230 million), up 141 per cent
- Cash of €6,421 million at June 30, 2015 was up €1,477 million on 2014 year end
- Adjusted gearing down 8 points to 43 per cent and adjusted net debt to EBITDAR improved 0.4 to 1.5 times
Willie Walsh, IAG Chief Executive Officer, said:
“We made an operating profit of €530 million in the quarter, up from a €380 million operating profit last year.
“At constant currency, revenue was down 1.2 per cent with passenger unit revenue down 6.6 per cent. Non-fuel unit costs were down 6.9 per cent while fuel unit costs were down 12 per cent.
“We said previously that profit improvement would be slower in the second quarter and we are on track to reach our full year targets.
“We continue to take cost out of the business, with both employee and supplier unit costs down at constant currency, and improvements in productivity levels.
“In the half year, we made an operating profit of €555 million which is up from a €230 million operating profit last year”.
Quarter 2 operating profit overview:
IAG’s operating profit for the quarter to June 30, 2015 was €530 million, an improvement of €150 million from the same quarter in the prior year. British Airways made a profit of €453 million (2014: operating profit €332 million); Iberia made a profit of €51 million (2014: operating profit €16 million) and Vueling’s profit was €24 million (2014: operating profit €30 million) on top of a 13.9 per cent capacity increase.
Half year financial review:
On May 26, 2015 IAG and the independent directors of Aer Lingus Group plc (‘Aer Lingus’) reached agreement on the terms of a recommended cash offer for the entire issued ordinary share capital of Aer Lingus to be made by AERL Holding Limited, a wholly incorporated subsidiary of IAG. The offer is for €2.55 per Aer Lingus share, comprising a cash payment of €2.50 per Aer Lingus share and the payment of a cash dividend of €0.05 per Aer Lingus share (paid by Aer Lingus on May 29, 2015 to Aer Lingus shareholders on the register of members on May 1, 2015). The transaction values Aer Lingus’ entire issued ordinary share capital at approximately €1.4 billion. The offer, extended to August 18, 2015, is subject to the terms and conditions that have not already been satisfied which are set out in Appendix I of the Offer document (www.iairgroup.com), in particular acceptance of the Offer having been received in respect of the Aer Lingus shares held by the Ryanair Group.
Operating and market environment
The half year has seen decreasing fuel prices although partially offset by adverse exchange. The improvement in the pound sterling against the euro has generated translation benefits for the Group which again have been partially offset by the US dollar strength.
Revenues in our domestic, LATAM and Asia Pacific markets were up 3 to 4 per cent at constant currency (‘ccy’) on capacity growth of about 8 per cent. The LATAM market has been impacted by weakness in Brazil and Venezuela. Revenues in our European markets rose 8 per cent at ccy while capacity for the Group was increased by 13 per cent partially through seat densification but also reflecting additional capacity in our low cost carriers, Iberia Express and Vueling. Capacity in the Africa, Middle East and South Asia region was reduced 4 per cent but revenues fell further impacted by weakening of oil routes. North Atlantic passenger unit revenues were broadly flat for the six months, down 1 per cent.
IAG increased capacity (ASKs) by 5.3 per cent in the first six months of the year and traffic volumes rose 5.8 per cent, increasing seat factor to 79.3 per cent. The rise in capacity reflects growth at Vueling, restoration of routes at Iberia and seat densification in British Airways’ shorthaul.
Passenger revenue increased 11.5 per cent compared to the prior year six months with approximately 10.4 points of beneficial currency impact. Passenger unit revenue (passenger revenue per ASK) was down 3.8 per cent at constant currency (‘ccy’) from lower yields. Yields have been impacted at Vueling and Iberia by growth. British Airways yields are down related to weakening oil routes and increased competitor capacity on transatlantic routes in addition to the impacts of currency dislocation. Overall the Group has maintained its volumes in the first half of 2015 with seat factor rising 0.4 points.
Cargo revenue for the period decreased by 8.0 per cent at ccy reflecting the reduction in the Cargo freighter programme. The performance of the Cargo business was up with load factors flat, positive mix partially offsetting market price pressure, and benefits from strong cost management.
Other revenue was up 6.3 per cent at ccy. The increase includes a €50 million benefit from the timing of the recognition of Avios revenue. The underlying revenue rose through higher customer engagement at BA Holidays and in the Avios loyalty scheme, partially offset by lower third party maintenance activity in the period.
Employee unit costs improved 3.5 per cent at ccy. The average number of employees reduced by 0.3 per cent and productivity rose by 5.6 per cent with improvements at each airline.
Fuel costs decreased 6.8 per cent at ccy, driven by lower average fuel prices net of hedging. At constant currency and on a unit basis the improvement was 11.7 per cent, with benefits from more efficient aircraft and improved operational procedures.
Handling, catering and other operating costs decreased 1.8 percent at ccy benefiting from an improvement in operations reducing costs related to disruption, including compensation fees and baggage costs. The improvements have been partially offset by higher costs due to additional passengers carried, inflationary price increases and BA Holiday activity.
Landing fees and en-route charges rose 6.4 per cent excluding adverse currency impacts. The performance reflects increased airport charges and additional volume, with ASKs up 5.3 per cent and sectors flown up 6.1 per cent.
Engineering and other aircraft costs were broadly flat at ccy. Increases are driven by volume and price, offset by the reduced freighter flying of IAG Cargo and less third party maintenance activity.
Property, IT and other costs decreased, half of which is due to cost improvements including IT initiatives and the remaining reduction from one-time benefits.
Selling costs decreased 3.9 per cent excluding adverse currency impacts due to the timing of promotions and from improvements in supplier contract terms. The reduction in selling costs was partially offset by volume increases related to additional passengers carried during the period.
Ownership costs increased 1.6 per cent at ccy. At June 30, 2015 the Group had 472 aircraft, an increase of 13 from June 30, 2014. The increase in aircraft primarily related to 22 additional Airbus A320s, while the Boeing 737-400s are being retired.
At constant currency non-fuel unit costs decreased by 4.9 per cent with benefits from exiting the Cargo freighter program and the seat densification at British Airways. Non-fuel unit costs improved at British Airways and Iberia, while Vueling was broadly flat.
Operating profit overview
IAG’s operating profit for the six months to June 30, 2015 was €555 million, an improvement of €325 million from the prior year. British Airways made a profit of €570 million (2014: €327 million); Iberia made a loss of €4 million (2014: €95 million) and Vueling’s loss was €5 million (2014: €0 million).
There have been no exceptional items in the six months to June 30, 2015 or 2014.
The net non-operating cost was €143 million for the six months compared to €75 million for the same period last year. The increase related to ‘Net currency retranslation charges’ from the weakening of the euro against the US dollar and additional finance costs primarily from adverse translation currency with the weakening of the euro against the pound sterling.
The tax charge for the six months to June 30, 2015 is €80 million (2014: €59 million charge) with an effective tax rate of 19 per cent.
Profit after tax
The profit after tax for the six month period to June 30, 2015 was €332 million (2014: €96 million).
For the six months to June 30, 2015, the reported results are impacted by translation currency from converting British Airways’ results from sterling to the Group’s reporting currency of euro. The net impact on the operating profit was €73 million favourable, with an increase in revenue of €814 million and an increase in cost of €741 million, reflecting a 10.3 per cent weakening of the euro versus the pound sterling.
The transactional exchange rate impact across the Group was €167 million favourable on revenues and €194 million adverse on costs with a net adverse impact of €27 million.
The net benefit on operating profit from currency was €46 million for the six months to June 30, 2015.
The Group’s cash position was €6,421 million up €1,477 million from December 31, 2014. British Airways’ cash position was €3,730 million, Iberia €1,118 million, Vueling €829 million and the parent and other Group companies €744 million.
Compared to December 31, 2014, the Group’s adjusted net debt decreased by €618 million to €5,463 million and adjusted net debt to EBITDAR improved 0.4 points. Adjusted gearing improved by eight points.
Principal risks and uncertainties
During the period we have continued to maintain and operate our structure and processes to identify, assess and manage risks. The principal risks and uncertainties affecting us, detailed on pages 87 to 93 of the December 31, 2014 Annual Report and Accounts, remain relevant for the remaining six months of the year.
Other strategic developments
On January 26, 2015, Iberia announced plans to begin flights to Cali and Medellin in Colombia in early July. Iberia highlighted that this has been possible due to its restructuring which has allowed it to achieve a competitive cost base.
Iberia and its subsidiary Iberia Express were the world’s most punctual airlines in January according to the latest ranking published by FlightStats. Iberia led network carriers with 92.72 per cent of flights on time while Iberia Express achieved 96.34 per cent punctuality the highest score among low cost carriers. The airline’s improvement in operational performance has been a key aspect of its restructuring.
British Airways is changing its ‘On Business’ loyalty scheme for small and medium sized businesses to incorporate American Airlines and Iberia. The new partnership will allow On Business members to benefit from collecting and spending across all three airlines under one program.
Vueling Airlines has become the first airline to offer a self-service baggage check-in at its hub in Barcelona, also as part of a marketing agreement, Vueling has begun to install power outlets in the priority seats of its fleet.
On March 4, 2015, Iberia announced that it had reached an agreement with Airbus to take early delivery of eight Airbus A330-200s that IAG ordered for the airline last year to replace Airbus A340-300s. The new aircraft will join Iberia’s longhaul fleet up to 14 months earlier than initially planned, between November 2015 and December 2016.
On March 19, 2015, Vueling signed an agreement with American Airlines to feed its longhaul flights from the US at Barcelona-El Prat and Rome-Fiumicino airports.
On March 29, 2015, British Airways began its Airbus A380 services to San Francisco from London Heathrow adding 6,000 more seats a month between the two cities.
In April 2015, IAG took delivery of its first five Airbus A320s standardized aircraft which have joined Vueling’s fleet. The aircraft are part of IAG’s harmonization plan which aims at reducing costs by standardizing its Airbus A320 fleet across the Group.
On May 13, 2015, Iberia announced that it won 17 out of 21 tendered licenses to provide handling services at Spanish airports. The airline remains the main handling operator in Spain and highlighted that this outcome has been achieved due to the cost and productivity agreements reached with its employees.
On May 27, 2015, British Airways started daily flights to Kuala Lumpur on a four class Boeing 777-200 ER aircraft. The airline also announced two new routes from Heathrow for the winter season. From October 25, 2015, it will start flights to Keflavik (Reykjavik) while services to Salzburg will commence on December 5, 2015.
On June 1, 2015, Iberia resumed its flights to Havana. The five per week service between Madrid and the Cuban capital is operated on Airbus A330 aircraft with new longhaul cabins. These new flights aim to strengthen further Iberia’s leadership between Europe and Latin America.
On June 9, 2015, Vueling announced that it had become a member of IATA (International Air Transport Association). The airline will benefit from lower costs on transactions with IATA members.
On June 17, 2015, the chief executives of IAG, Air France-KLM, EasyJet, Lufthansa Group and Ryanair announced that they will work together to develop an EU aviation strategy which will support growth and jobs across Europe, strengthen the sector and provide more choice and competitive fares to European passengers. This is in response to a consultation by the EU Transport Commissioner Violeta Bulc.
Our mission is to be the leading international airline group. This means we will:
• win the customer through service and value across our global network;
• deliver higher returns to our shareholders through leveraging cost and revenue opportunities across the Group; • attract and develop the best people in the industry;
• provide a platform for quality international airlines, leaders in their markets, to participate in consolidation;
• retain the distinct cultures and brands of individual airlines.
By accomplishing our mission, IAG will help to shape the future of the industry, set new standards of excellence and provide sustainability, security and growth.
Read the full report: CLICK HERE
Copyright Photo: SPA/AirlinersGallery.com. Iberia will retiring its Airbus A340-300s by December 2016. On March 4, 2015, Iberia announced that it had reached an agreement with Airbus to take early delivery of eight Airbus A330-200s that IAG ordered for the airline last year to replace Airbus A340-300s. The new aircraft will join Iberia’s long-haul fleet up to 14 months earlier than initially planned, between November 2015 and December 2016. Airbus A340-313 EC-GLE (msn 146) departs from London (Heathrow).
The European Commission (Brussels) has issued this statement concerning the proposed acquisition of Aer Lingus (Dublin) by the International Airlines Group (IAG) (London):
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Irish airline Aer Lingus by International Consolidated Airlines Group (IAG).
IAG is the holding company of British Airways, Iberia and Vueling. The clearance is conditional upon commitments offered by the parties to address the Commission’s concerns regarding the transaction as notified.
The Commission had concerns that the merged entity would have faced insufficient competition on several routes.
The Commission also found that the merged entity would have prevented Aer Lingus from continuing to provide traffic to the long-haul flights of competing airlines on several routes.
European Commissioner in charge of competition policy Margrethe Vestager said: “By obtaining significant concessions from the airlines the Commission has ensured that air passengers will continue to have a choice of airlines at competitive prices after IAG’s takeover of Aer Lingus.
The five million passengers travelling each year from Dublin and Belfast to London will be able to choose among several strong carriers.
And we are also protecting passengers travelling on connecting flights between Ireland and the rest of the world.”
The clearance decision is conditional upon the following commitments, which address the Commission’s concerns:
The release of five daily slot pairs at London-Gatwick airport to facilitate the entry of competing airlines on routes from London to both Dublin and Belfast ; and Aer Lingus continuing to carry connecting passengers to use the long-haul flights of competing airlines out of London- Heathrow, London-Gatwick, Manchester, Amsterdam, Shannon and Dublin .
The Commission’s investigation
The Commission’s investigation found that the transaction, as initially notified, would have led to high market shares on the Dublin-London, Belfast-London and Dublin-Chicago routes. The merged entity would have faced insufficient competitive constraints from the remaining players which could ultimately lead to higher prices.
The Commission also analysed whether there was a risk that IAG would prevent passengers flying on Aer Lingus’ short-haul flights, from Dublin, Cork, Shannon, Knock and Belfast, from
connecting with long-haul flights operated by competing airlines out of other European airports, including Heathrow, Gatwick, Manchester, Dublin and Amsterdam.
IAG submitted commitments to release five daily slot pairs at London Gatwick which can be used on the specific routes of concern, namely Dublin-London and Belfast-London.
The availability of these slots, and other incentives such as the acquisition of grandfathering rights after a certain period of time, facilitate the entry of competing airlines.
Furthermore, IAG made a commitment to enter into agreements with competing airlines which operate long-haul flights out of London Heathrow, London Gatwick, Manchester, Amsterdam, Shannon and Dublin so that Aer Lingus will continue to provide these airlines with connecting passengers.
Passengers will therefore continue to have a choice to use other airlines than IAG when connecting at these airports, for instance on Heathrow-New York, Gatwick-Las Vegas, Manchester-Orlando, Amsterdam-Singapore, Shannon-Chicago, and Dublin-Chicago.
These commitments adequately address all competition concerns identified by the Commission.
The Commission therefore concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or a substantial part of it. The transaction was notified to the Commission on 27 May, 2015.
Companies and products International Consolidated Airlines Group (“IAG” ) of the United Kingdom, is the holding company of British Airways, Iberia Líneas Aéreas de España S.A. and Vueling Airlines S.A.
Aer Lingus of Ireland is currently mainly owned by the Republic of Ireland and Ryanair, a competing carrier. Other significant shareholders include Etihad Airways.
Both IAG and Aer Lingus provide air transport for passengers, air transport for cargo, airport ground handling services and landside cargo handling services.
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.
The vast majority of mergers do not pose competition problems and are cleared after a routine review.
From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
The commitments offered by the Parties will be made available as of 16 July under the case number
The International Airlines Group (IAG) issued this statement:
International Consolidated Airlines Group (IAG) welcomes the decision by the European Commission to approve its Offer for Aer Lingus.
IAG has offered the following remedies to the EC as part of the regulatory process:
- Five daily slot pairs will be made available to other airlines at London Gatwick for flights between the airport and Dublin or Belfast.
- Specifically, two of the five daily frequencies must be operated between Gatwick and Dublin.
- One daily frequency must be operated between Gatwick and Belfast.
- The other two frequencies can be operated between Gatwick and either Dublin or Belfast.
- Other airlines can apply for seats on Aer Lingus’ shorthaul network for their transfer passengers, on normal commercial terms.
Copyright Photo: SPA/AirlinersGallery.com. London’s Gatwick Airport was the main competitive concern for the EC. Aer Lingus’s Airbus A320-214 EI-DEE (msn 2250) arrives at LGW.