Tag Archives: IAG

Qatar Airways increases its share of IAG

Qatar Airways following the failure of Air Italy, has increased its share of the IAG Group. The airline issued this short statement:

Qatar Airways Group Q.C.S.C. is pleased to announce that it has increased its shareholding in International Consolidated Airlines Group, S.A. (IAG) from 21.4 percent to 25.1 percent.

Qatar Airways Group Chief Executive Mr. Akbar Al Baker stated, “Our investment to date has been highly successful and the announced increase in our shareholding is evidence of our continued support of IAG and its strategy.”

“Qatar Airways continues to consider opportunities to invest in airlines and support management teams that share our vision to enhance travel opportunities for airline passengers across the globe.”

IAG’s Willie Walsh to retire

International Airlines Group (IAG) announces that Willie Walsh has decided to retire as chief executive. He will stand down from the role and from the Board of IAG on March 26, 2020 and will retire on June 30, 2020. Luis Gallego, currently Iberia chief executive, will succeed Willie.

Antonio Vázquez, IAG chairman, said: “Willie has led the merger and successful integration of British Airways and Iberia to form IAG.  Under Willie’s leadership IAG has become one of the leading global airline groups.

“Willie has been the main driver of this unique idea that is IAG. I hugely admire his commitment, strong leadership and clear vision, always ready to take on whatever challenges lay ahead of him. I am deeply respectful of what he has achieved as CEO of this Group, of his sense of fairness, his transparency and his capacity to integrate people regardless of nationalities or backgrounds.

“Willie has established a strong management team and I am delighted that Luis will be promoted from this team to succeed Willie as CEO. Luis started his career in the airline industry in 1997 with Air Nostrum and, since 2014, he has been CEO of Iberia where he has led a profound transformation of this airline. The Board is confident that Luis is the right person to lead IAG in the next stage of its development and we look forward to working closely with Luis in his new role”.

Willie Walsh said: “It has been a privilege to have been instrumental in the creation and development of IAG. I have had the pleasure of working with many exceptional people over the past 15 years at British Airways and at IAG. Luis has been a core member of the team and has shown true leadership over the years and I have no doubt he will be a great CEO of IAG“.

Luis Gallego said: “It has been a great pleasure to work with Willie over the last seven years. It is a huge honour to lead this great company. It is an exciting time at IAG and I am confident that we can build on the strong foundations created by Willie“.

Luis Gallego’s successor at Iberia will be announced in due course.

IAG to acquire Air Europa for €1 billion, Air Europa to be run by Iberia

International Consolidated Airlines Group (IAG) and Globalia are pleased to announce that definitive transaction agreements have been signed under which IAG’s wholly owned subsidiary, IB OPCO Holding S.L. (Iberia), has agreed to acquire the entire issued share capital of Air Europa for €1 billion to be satisfied in cash at Completion  and subject to a closing accounts adjustment.

Highlights

  • Transforms IAG’s Madrid hub into a true rival to Europe’s four largest hubs: Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle.
  • Re-establishes IAG as a leader in the highly attractive Europe to Latin America and Caribbean market.
  • Offers significant synergy potential in terms of cost and revenue.
  • EPS accretive in the first full year and accretive to IAG’s return on invested capital by the fourth year after Completion.
  • Completion is expected to take place in H2 2020 following receipt of relevant approvals.

Commenting on today’s announcement, Willie Walsh, Chief Executive of IAG, said:

“Acquiring Air Europa would add a new competitive, cost effective airline to IAG, consolidating Madrid as a leading European hub and resulting in IAG achieving South Atlantic leadership, therefore generating additional financial value for our shareholders.

IAG has a strong track record of successful acquisitions, most recently with the acquisition of Aer Lingus in 2015 and we are convinced Air Europa presents a strong strategic fit for the group.”

Javier Hidalgo, Chief Executive of Globalia, said:

“For Globalia, the incorporation of Air Europa to IAG implies the strengthening of the company’s present and future that will maintain the path followed by Air Europa in the last years. We are convinced that the incorporation of Air Europa to a group such as IAG, who over all these years has demonstrated its support to the development of airlines within the group and the Madrid hub, will be a success”.

Luis Gallego, Chief Executive of Iberia, said:

“This is of strategic importance for the Madrid hub, which in recent years has lagged behind other European hubs. Following this agreement, Madrid will be able to compete with other European hubs on equal terms with a better position on Europe to Latin America routes and the possibility to become a gateway between Asia and Latin America.”

Strategic rationale

Air Europa is one of the leading private airlines in Spain, operating scheduled domestic and international flights to 69 destinations, including European and long-haul routes to Latin America, the United States of America, the Caribbean and North Africa. In 2018, Air Europa generated revenue of €2.1 billion and an operating profit of €100 million. It carried 11.8 million passengers in 2018 and ended the year with a fleet of 66 aircraft.

The Board of IAG believes that the transaction would:

  • Increase the importance of IAG’s Madrid hub, transforming it into a true rival to Europe’s big four hubs: Amsterdam, Frankfurt, London Heathrow and Paris Charles De Gaulle;
  • Unlock further network growth opportunities and re-establish IAG’s South Atlantic leadership; and
  • Result in significant customer benefits through providing increased

The Air Europa brand will initially be retained and the company will remain as a standalone profit center within Iberia run by Iberia CEO Luis Gallego. The managements of IAG and Iberia anticipate opportunities to unlock value through the Acquisition across three key areas:

  • Integrating Air Europa into the existing Iberia hub structure at Madrid;
  • Creating commercial links between Air Europa and other IAG operating companies, in addition to inclusion into IAG’s joint businesses;
  • Integrating Air Europa onto the IAG platform of common services.

Synergies and financial impact

The Acquisition is expected to generate cost synergies across selling, general and administrative expenses, procurement, handling and distribution costs with full run-rate synergies to be achieved by 2025. IAG expects implementation costs to be phased over the same period.

In addition, the Acquisition is expected to generate significant revenue synergies by 2025, including:

  • Adding reciprocal intra-group codeshares across all connecting gateways;
  • Adjusting timings to maximise connectivity through the Madrid hub;
  • Aligning commercial policies and integrating sales forces in home markets;
  • Integrating Air Europa into existing IAG joint businesses; and
  • Integrating Air Europa into the Avios currency for loyalty.

The Acquisition is expected to be earnings accretive in the first full year following Completion and accretive to IAG’s return on invested capital within four years after Completion.

Financing and expected timetable

The Acquisition will be funded by external debt. After Completion, IAG’s net debt to EBITDA is expected to be 0.3 times higher as a result of the Acquisition compared to 1.2 times last reported at the end of Q3 2019.

Assuming satisfaction of all conditions to the Acquisition, Completion is expected to take place in 2H 2020.

IAG has agreed to pay Air Europa a break fee of €40 million in the event that the transaction fails to receive the necessary regulatory approvals and either party elects to terminate the transaction agreement.

The Acquisition constitutes a Class 2 transaction for the purposes of the UK Financial Conduct Authority’s Listing Rules and, as such, does not require IAG’s shareholders’ approval. The gross assets of Air Europa at 31 December 2018 were €901 million. The pre-tax profits attributable to Air Europa for the year ended 31 December 2018 were €67 million.

Steve Gunning

Chief Financial Officer

November 4, 2019

Air Europa aircraft photo gallery:

IAG backs the Airbus A321XLR with an order for 14 aircraft

International Airlines Group (IAG) has selected the Airbus A321XLR to expand its fleet of highly efficient single aisles with a firm order for 14 aircraft. Of these, eight are destined for Iberia and six for Aer Lingus.

IAG, the parent company of leading airlines also including British Airways, Level and Vueling, is one of Airbus’s largest customers and this agreement will take the overall order from the group to 530 aircraft. IAG airlines combined operate one of the world’s largest Airbus fleets with over 400 aircraft.

The aircraft will enable Aer Lingus to launch new routes beyond the US East Coast and Canada. For Iberia, this is a new aircraft type that will enable it to operate new transatlantic destinations and increase frequencies in key markets.

Images: Airbus.

International Airlines Group announces intent to buy 200 Boeing 737 MAX airplanes

Boeing has made this announcement:

One of the world’s largest airline groups announced today it plans to build its future fleet with the Boeing 737 MAX with an intention to purchase 200 MAX jets.

International Airlines Group (IAG) and Boeing said the two companies have been in discussions regarding the opportunity and signed a letter of intent at the Paris Air Show in a deal that would be valued at more than $24 billion, per list prices.

IAG is the parent company of Aer Lingus, British Airways, Iberia, Vueling and Level that fly more than 113 million passengers a year combined. The group has been a long-time operator of Boeing twin-aisle airplanes.

 

Earlier this year, IAG group committed to and finalized a major order for Boeing’s newest long-haul model, the 777X, to complement its fleet of current-generation 777s and new 787 Dreamliners. In the single-aisle segment, IAG and its affiliates used to operate Classic 737 aircraft. Today, its fleet is almost exclusively Airbus A320 family aircraft. IAG CEO Willie Walsh has said the group would consider the 737 MAX as part of diversifying its future fleet to spur competition.

In selecting the 737 MAX, IAG says it will fly a combination of the 737 MAX 8, which seats up to 178 passengers in a two-class configuration, and the larger 737 MAX 10 jet, which can accommodate as many as 230 passengers. The airline did not disclose a specific split between the two MAX models, though it anticipates deploying the aircraft at a number of the group’s airlines including Vueling and Level.

When a final agreement is reached, it will be posted to Boeing’s Orders & Deliveries website.

IAG is one of the world’s largest airline groups with 582 aircraft flying to 268 destinations, carrying 113 million passengers in 2018.

In addition, IAG issued this statement:

International Airlines Group (IAG) has signed a letter of intent with Boeing for 200 Boeing 737 aircraft to join its fleet. The LOI is subject to formal agreement.

The mix of 737-8 and 737-10 aircraft would be delivered between 2023 and 2027 and would be powered by CFM Leap engines. It is anticipated that the aircraft would be used by a number of the Group’s airlines including Vueling, Level plus British Airways at London Gatwick Airport.

Willie Walsh, IAG chief executive, said: “We’re very pleased to sign this letter of intent with Boeing and are certain that these aircraft will be a great addition to IAG’s shorthaul fleet.

“We have every confidence in Boeing and expect that the aircraft will make a successful return to service in the coming months having received approval from the regulators”.

 

Boeing, International Airlines Group build on 777X order with services agreements

Boeing and International Airlines Group (IAG), one of the world’s largest airline groups, signed two agreements at the Paris Air Show today that will provide key services for IAG’s British Airways, including parts for the airline’s Airbus A320 family and its Boeing 777 fleet.

With the first agreement, Boeing will furnish British Airways with its Component Services Program where Boeing and its partners will own, manage, and maintain a global exchange inventory of parts for the airline’s A320 and A320neo aircraft. This agreement – the first of its kind for Boeing – will open convenient access to parts for British Airways, which operates an extensive route network.

British Airways has also signed an agreement for three Landing Gear Exchanges for its 777 fleet. Through the program, operators receive an overhauled and certified landing gear from an exchange pool maintained by Boeing, with stocked components and supporting parts shipping within 24 hours.

Following the signing of these new services agreements, Boeing and IAG held a deferred ceremonial signing to celebrate its order for 18 777X airplanes. Earlier this year, IAG placed firm orders for 18 777-9 aircraft and 24 options for British Airways. The airline selected the 777X, the world’s largest, most efficient twin aisle jet, as part of its long-haul fleet modernization program, joining a group of leading global carriers that have selected the new 777X.

The firm order by IAG puts the 777X at 364 orders and commitments from more than eight customers. Production of the 777X began in 2017, with first flight expected later this year and first delivery expected in 2020.

International Airlines Group (IAG) operates 582 aircraft and serves 268 destinations, carrying 113 million passengers in 2018. It is the parent company of Aer Lingus, British Airways, Iberia, LEVEL and Vueling.

IAG reports its first quarter results

International Consolidated Airlines Group (IAG) today (May 10, 2019) presented Group consolidated results for the three months to March 31, 2019.

IAG period highlights on results:

  • First quarter operating profit €135 million before exceptional items (2018 pro forma1: €340 million)
  • Passenger unit revenue for the quarter down 0.8 per cent, down 1.4 per cent at constant currency
  • Non-fuel unit costs before exceptional items for the quarter up 0.8 per cent, down 0.6 per cent at constant currency on a pro forma1 basis
  • Fuel unit costs for the quarter up 15.8 percent, up 11.1 per cent at constant currency
  • Net foreign exchange operating profit impact for the quarter adverse €61 million
  • Cash of €7,481 million at March 31, 2019 was up €1,207 million on December 31, 2018 and net debt to EBITDA improved by 0.2 to 1.0 times
  • Profit after tax before exceptional items €70 million down 62.6 per cent, and adjusted earnings per share down 57.5 per cent on a pro forma1 basis

 

Performance summary:

  Three months to March 31
  Statutory   Pro forma   Statutory
Highlights € million  2019   20181 Higher /

(lower)

2019 20182
Passenger revenue 4,646   4,415 5.2 % 4,646 4,415
Total revenue 5,318   5,022 5.9 % 5,318 5,022
Operating profit before exceptional items 135   340 (60.3)% 135 280
Exceptional items   639 (100.0)% 639
Operating profit after exceptional items 135   979 (86.2)% 135 919
             
Available seat kilometres (ASK million) 75,423   71,093 6.1 %    
Passenger revenue per ASK (€ cents) 6.16   6.21 (0.8)%    
Non-fuel costs per ASK (€ cents) 5.06   5.02 0.8 %    
             
             
Alternative performance measures 2019   20181 Higher /

(lower)

   
Profit after tax before exceptional items (€ million) 70   187 (62.6)%    
Adjusted earnings per share (€ cents) 3.7   8.7 (57.5)%    
Net debt (€ million)3,4 5,225   6,430 (18.7)%    
Net debt to EBITDA3,4 1.0   1.2 (0.2x)    
             
             
Statutory results € million 2019   2018 Higher /

(lower)

   
Profit after tax and exceptional items 70   794 (91.2)%    
Basic earnings per share (€ cents) 3.7   38.5 (90.4)%    
Cash and interest-bearing deposits 7,481   7,442 0.5 %    
Interest-bearing long-term borrowings 12,706   6,953 82.7 %    
For definitions refer to the IAG Annual report and accounts 2018.    

1 Pro forma financial information is based on the Group’s statutory results with an adjustment for IFRS 16 ‘Leases’ from January 1, 2018. A reconciliation of the pro forma financial information to the Group’s statutory results is available on the Company’s website.

2 March 31, 2018 comparatives are the Group’s statutory results as reported.

3 Net debt is long-term borrowings less cash and cash equivalents and other interest-bearing deposits. EBITDA is operating profit before exceptional items and depreciation, amortisation and impairment.

4 The prior year comparative is pro forma December 31, 2018. The December 31, 2018 as reported was adjusted net debt of €8,355 million, and adjusted net debt to EBITDAR of 1.6 times.

 

Willie Walsh, IAG Chief Executive Officer, said:

“In a quarter when European airlines were significantly affected by fuel and foreign exchange headwinds, market capacity impacting yield and the timing of Easter, we remained profitable and are reporting an operating profit of €135 million.

“At constant currency, non-fuel unit costs were down 0.6 per cent while passenger unit revenue decreased by 1.4 per cent.”

 

Trading outlook

At current fuel prices and exchange rates, IAG expects its 2019 operating profit before exceptional items to be in line with 2018 pro forma. Passenger unit revenue is expected to be flat at constant currency and non-fuel unit cost is expected to improve at constant currency. We expect passenger unit revenue at constant currency to improve for the remainder of the year.