Tag Archives: International Consolidated Airlines Group

European Commission approves with concerns IAG’s proposed acquisition of Aer Lingus

The European Commission (Brussels) has issued this statement concerning the proposed acquisition of Aer Lingus (Dublin) by the International Airlines Group (IAG) (London):

European Commission logo

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:

IAG logo

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.

Aer Lingus aircraft slide show: AG Airline Slide Show

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IAG reports a third quarter net profit of $751 million

International Airlines Group (IAG) (British Airways, Iberia, Iberia Express and Vueling Airlines) (London) reported a third quarter net profit of €598 million ($751 million) up 3.1% from €580 million ($728.4 million) in the same quarter a year ago.

The airline group issued this full statement:

NINE MONTHS RESULTS ANNOUNCEMENT

International Consolidated Airlines Group (IAG) presented Group consolidated results for the nine months to September 30, 2014.

IAG period highlights on results:

  • Third quarter operating profit €900 million (2013: €690 million) before exceptional items, €210 million better than last year
  • At constant currency, third quarter passenger unit revenue down 0.9 per cent and non-fuel unit costs down 4.5 per cent
  • Revenue for the quarter up 8.5 per cent to €5,866 million, up 6.9 per cent at constant currency
  • Fuel unit costs for the quarter down 7.5 per cent at constant currency
  • Operating profit for the nine months €1,130 million (2013: €657 million) before exceptional items, €473 million better than last year
  • Exceptional charge of €82 million for currency re-evaluation
  • Cash of €5,064 million at September 30, 2014, up €1,431 million on 2013 year end
  • Adjusted gearing down 4 points to 46 per centPerformance summary:

Nine months to September 30

Financial data € million

2014

2013

Higher / (lower)

Passenger revenue

13,435

12,299

9.2 %

Total revenue

15,155

14,113

7.4 %

Operating profit before exceptional items

1,130

657

Exceptional items

(82)

(309)

Operating profit after exceptional items

1,048

348

Profit after tax and exceptional items

694

77

Basic earnings per share (€ cents)

33.4

3.2

Operating figures

2014

2013

Higher / (lower)

Available seat kilometres (ASK million)

190,234

172,234

10.5 %

Revenue passenger kilometres (RPK million)

153,537

140,220

9.5 %

Seat factor (per cent)

80.7

81.4

(0.7pts)

Passenger revenue per RPK (€ cents)

8.75

8.77

(0.2)%

Passenger unit revenue per ASK (€ cents)

7.06

7.14

(1.1)%

Non-fuel unit costs per ASK (€ cents)

5.00

5.21

(4.0)%

€ million

At September 30,

At December 31,

Higher / (lower)

2014

2013

Cash and interest-bearing deposits

5,064

3,633

39.4 %

Adjusted net debt(1)

5,547

5,701

(2.7)%

Adjusted gearing(2)

46%

50%

(4pts)

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

Willie Walsh, IAG Chief Executive Officer, said:

“This quarter we are reporting an operating profit before exceptional items of €900 million. At constant currency, revenue was up 6.9 per cent with non-fuel unit costs down 4.5 per cent and fuel unit costs down 7.5 per cent.

“We continued to grow capacity efficiently and both our non-fuel and fuel unit cost performances were strong with the latter boosted by the introduction of new, more efficient aircraft into our fleet.

“British Airways made an operating profit of €607 million, compared to €477 million last year, and grew capacity while retaining its focus on cost control. Iberia’s operating profit increased to €162 million from €74 million last year highlighting its strong cost discipline combined with the continued benefits of restructuring. Vueling continued to grow, developing new bases in Italy and Belgium, with an operating profit of €140 million compared to €139 million last year.

“In the nine months, we made an operating profit of €1,130 million before exceptional items, up by €473 million from last year”.

Copyright Photo: Paul Denton/AirlinersGallery.com. Iberia improved its financial performance with labor stability which was one of the main drivers for a better financial performance of the group in the third quarter. Iberia’s Airbus A320-214 EC-MCS (msn 6244) taxies at Geneva in the new look.

British Airways: AG Slide Show

Iberia: AG Slide Show

Iberia Express: AG Slide Show

Vueling Airlines: AG Slide Show

IAG reduces its first quarter loss to $206.3 million

International Consolidated Airlines Group (IAG) (British Airways, Iberia and Vueling Airlines) (London) today (May 9, 2014) presented Group consolidated results for the first quarter and the three months to March 31, 2014.

IAG period highlights on results:

. First quarter operating loss €150 million ($206.3 million) (2013: operating loss of €278 million – $382.3 million) before exceptional items
. Revenue for the quarter up 6.7 per cent to €4,203 million, up 7.6 per cent at constant currency
. Non-fuel costs up 3.8 per cent, up 4.8 per cent at constant currency
. At constant currency, first quarter passenger unit revenue down 1.4 per cent (excluding Vueling down 0.5 per cent) and non-fuel unit costs down 6.2 per cent (excluding Vueling down 4.2 per cent)
. Fuel unit costs for the quarter down 8.9 per cent, 7.4 per cent at constant currency
. Cash of €4,004 million at March 31, 2014 was up €371 million on 2013 year end
. Adjusted gearing remains at 50 per cent

Willie Walsh, IAG Chief Executive Officer, said:

“We’re pleased that our quarterly operating loss has reduced significantly from €278 million last year to €150 million, especially as Vueling’s quarterly losses were not included last year as they weren’t in the Group. At constant currency, revenue was up 7.6 per cent and non-fuel costs rose 4.8 per cent.

“Iberia has almost halved its losses from quarter one last year with an operating loss of €111 million compared to €202 million. The airline continues to benefit from restructuring and these figures don’t reflect the impact of recent pay and productivity agreements which took effect in April. While the restructuring remains work in progress, Iberia is gradually resuming some routes including longhaul services to Santo Domingo and Montevideo.

“British Airways made an operating loss of €5 million in the quarter, compared to a €72 million operating loss in 2013. The airline has increased capacity within a controlled cost environment and benefited from the efficiency of its new Airbus A380 and Boeing 787 aircraft.

“Vueling made an operating loss of €30 million and has managed to keep its losses flat while growing capacity. The airline continues to grow with its main focus in southern Europe”.

Copyright Photo: Antony J. Best/AirlinersGallery.com. British Airways’ Airbus A380-841 G-XLEB (msn 121) approaches the runway at London’s Heathrow Airport.

British Airways: AG Slide Show

Iberia: AG Slide Show

Vueling Airlines: AG Slide Show