Qatar Airways acquires a 9.99% stake in IAG

London Air Travel » International Airlines Group

International Airlines Group - Aer Lingus, BA, Iberia, Vueling
International Airlines Group – Aer Lingus, BA, Iberia, Vueling

Interesting news breaking this morning, and proof that aviation is never dull.

International Airlines Group has confirmed in announcement to the stock exchange that Qatar Airways has acquired a 9.99% stake in International Airlines Group.

The news has been welcomed enthusiastically by IAG CEO Willie Walsh, citing the fact that Qatar Airways has recently joined the Oneworld alliance and British Airways has recently started co-operating with BA on areas such as codesharing on Qatar routes from Doha to Asia.

Willie Walsh also cites the opportunity for further commercial co-operation between Qatar Airways and IAG mber airlines.

There is certainly scope for greater collaboration. For example, BA still serves Doha via a stop in Bahrain and the two airlines could explore a revenue sharing joint-venture on routes to and beyond Doha, as BA has with other Oneworld alliance partners such as American Airlines and Japan Airlines.

At the moment there are no changes to the board structure of IAG. Should Qatar Airways wish to increase its stake in IAG, under EU ownership rules, it would be capped at 49%.

Qatar Airways is not the first Middle Eastern airline to invest in European aviation as Etihad Airways has taken equity stakes in a portfolio of airlines such as Air Berlin, Aer Lingus, Alitalia and Air Serbia. Etihad also has a codeshare relationship with Air France KLM. Emirates has so far eschewed taking equity stakes in other airlines.

Finally, it is also noteworthy that Qatar Airways has invested in IAG at a time when it’s share price is at an all time high, above 550p. IAG’s share price has previously hit lows of around 110p.

IAG makes a further takeover bid for Aer Lingus

London Air Travel » International Airlines Group

Aer Lingus Airbus A320
Aer Lingus Airbus A320 (By BriYYZ via Wikimedia Commons)

After much press speculation over the past few weeks, International Airlines Group (parent company of British Airways, Iberia and Vueling) has submitted a further takeover bid for Aer Lingus.

Aer Lingus has formally acknowledged the bid, valued at €2.50 a share with a cash dividend of €0.05 per share.

Aer Lingus say the bid remains conditional on, amongst other things, confirmatory due diligence, the recommendation of the Board of Aer Lingus and the receipt of irrevocable commitments from Ryanair and the Minister for Finance of Ireland to accept the offer.

The key stumbling block to IAG acquiring Aer Lingus will be the Irish Government which holds a 25.1% stake in the airline. The Irish Government will need to be satisfied that links between London Heathrow and Ireland will be maintained and Aer Lingus will not loose its Heathrow slot-holdings.

Here are some thoughts we gathered before Christmas on what may happen of IAG is successful in acquiring Aer Lingus.

Update: Ireland’s RTE is reporting that Aer Lingus may make a statement on Tuesday about the bid.

Update:

Aer Lingus has issued a statement on Tuesday recommending the bid. International Airlines Group has also statement confirming that if the acquisition goes ahead Aer Lingus will maintain its own brand and join the Oneworld alliance and transatlantic joint-venture with BA and American Airlines. IAG will also seek to assuage concerns about the maintenance of links between London Heathrow and Cork and Shannon by entering into discussions with the Irish Government.

The story of an airline turnaround: IAG & Iberia

London Air Travel » International Airlines Group

Iberia Express Airbus A320 (Image Credit: Iberia Express)
Iberia Express Airbus A320 (Image Credit: Iberia Express)

This post is perhaps for students of aviation rather than the travelling public at large, but it is something worth noting in any event.

We have written much in recent years about British Airways’ International Airlines Group (“IAG”) sibling Iberia, and the wildly divergent financial performance of the two airlines since the formation of IAG four years ago in 2011.

Since Iberia started to report very heavy losses in 2012, IAG has taken a number of steps to improve the performance of Iberia.

This has included a complete overhaul of its senior management by a new CEO and (after bitter and unedifying industrial action with some rather unpleasant anti-British sentiment) reaching new collective agreements with its pilots and other staff working groups.

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What would IAG gain from buying Aer Lingus?

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When International Airlines Group (“IAG”) was formed a little under four years ago from the merger of British Airways and Iberia, it stated an ambition to acquire up to 12 additional airlines.

So far it has acquired two. These are bmi and Vueling. bmi has been integrated into British Airways (bmibaby was closed and bmi regional was sold). Vueling continues to operate on a standalone basis.

Today we learned of an approach by IAG to Aer Lingus. IAG confirmed in a statement to the Stock Exchange that it submitted a proposal to make an offer for Aer Lingus, which has been rejected by the Board of Aer Lingus.

Aer Lingus also formally acknowledged the approach, stating that the initial approach was preliminary, highly conditional and non-binding. Furthermore, in their view it under-valued the company.

What would IAG gain from buying Aer Lingus and why is it bidding now?
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An update on BA developments from IAG’s Capital Markets Day

London Air Travel » International Airlines Group

British Airways Logo (Image Credit: British Airways)
British Airways Logo (Image Credit: British Airways)

International Airlines Group is holding its annual Capital Markets today, Friday 7 November 2014.

Whilst the presentations are very much aimed at the investor community (This is the full slide deck – all 144 slides!.) there are some useful updates for passengers.

Here are some small items of news we’ve gleaned so far, principally concerning London Heathrow

As expected, BA will move out of Terminal 1 in 2015 and consolidate its operations in Terminals 3 and 5.

Work will also be underway to improve the experience for connecting passengers at Terminal 3.

All departures from Terminal 3 are now from boarding gates with coaching from remote stands eliminated.

Automatic check-in is to be introduced for domestic flights (this was trialled on some short haul routes some time ago).

Self baggage tagging at check-in and automated boarding gates are also to be introduced.

There is likely to be limited growth in BA’s long-haul network in 2015, beyond what new routes have bed announced, namely Kuala Lumpur.

The Boeing 767 is to be retired from BA’s long-haul fleet by 2016, to be replaced by the Boeing 787. A small number of Boeing 767s will operate in a short-haul configuration until 2018. This will then leave all short haul flights operated with Airbus A319/320/321 aircraft.

BA referred to its Oneworld alliance partner Qatar Airways and a potential codeshare partner in China providing growth opportunities. However, it has to be said these have been mooted for some time.

The presentation also included a section on Avios which is the currency used by the British Airways Executive Club and Iberia Plus frequent flyer programme. It is also the name of a travel regards programme in its own right, formerly known as Airmiles. This is likely to be a growth area in the coming years with more potential airlines joining the programme, in addition to Meridiana Fly and FlyBe.

We’ll update this page further with any more points of interest from the presentations and Q&A session.

IAG orders up to 120 Airbus A320 aircraft for Vueling

London Air Travel » International Airlines Group

International Airlines Group (IAG) has today confirmed that it has secured both firm orders and options for up to 220 Airbus A320 short haul aircraft for its subsidiary airlines British Airways, Iberia and Vueling.

Up to 120 of these aircraft are designated for its short-haul low cost carrier subsidiary Vueling. The new aircraft will enable Vueling to replace some of its existing aircraft and expand its network.

The Vueling order comprises 62 firm orders which include 30 A320ceo and 32 A320neo aircraft and options for a further 58 aircraft. The firm orders will be delivered to Vueling between 2015 and 2020.

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IAG still intent on pursuing 100% ownership of Vueling

London Air Travel » International Airlines Group

International Airlines Group is clearly not satisfied with owning over 90% of Vueling.

Although this gives IAG full control of Vueling for all practical and accounting purposes, the airline group is clearly intent on having 100% ownership of Vueling. On Friday, IAG made a further offer for the remaining 9% of Vueling’s shares listed on the stock exchange in Spain.

As stated before, IAG has been coy about its intentions regarding Vueling, save for stating it will remain a separate subsidiary in the IAG group. However, IAG is clearly very keen on pursuing full ownership and control of the airline.

IAG 1st Quarter Results – Analysts Question & Answer Session

London Air Travel » International Airlines Group

As previously mentioned, International Airlines Group published its 1st quarter results in Friday.

On the morning of the announcement, as per standard protocol, it held a webcast for analyst and the question and answer session that follows provides a lot of useful insight into current strategic developments at the airline group.

Here is a summary of some points of interest from the call:

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IAG publishes its 1st Quarter financial results

London Air Travel » International Airlines Group

International Airlines Group (IAG) has just published its financial results for the first quarter of the year.

Once again, the results are a tale of two airlines with a stark divergence in the performance of British Airways and Iberia. IAG made an overall operating loss of €278 million. However, IAG had to also take another exceptional charge of €311 million in connection with the restructuring of Iberia. This is in addition to the exceptional charges and provisions IAG took at the end of 2012. The overall loss after tax for the quarter was €630 million.

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