Monday Briefing – 4 November 2019

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International Airlines Group
International Airlines Group

Welcome to our Monday Briefing for the week beginning 4 November 2019

International Airlines Group To Acquire Air Europa

IAG has announced to the stock exchange this morning that it has reached an agreement to acquire Air Europa for €1 billion.

IAG claims the acquisition will consolidate its position in the Europe – South America market and the competitiveness of its Madrid hub against European rivals. Last year, Air Europa carried 11.8 million passengers operating a fleet of 66 aircraft.

Air Europa will initially operate as a standalone airline in IAG but will co-operate with other IAG airlines through codesharing and adoption of the Avios frequent flyer currency. The transaction is expected to complete in the second half of 2020. This will be the first acquisition by IAG in nearly five years following the purchase of Aer Lingus.

The full press statement can be viewed at IAG and a full write up of the deal is here.

International Airlines Group Capital Markets Day

IAG holds its annual Capital Markets Day this coming Friday, 8 November 2019.

It’s at previous events we have learned of BA’s plans to “densify” its Boeing 777 aircraft and its investment plans for Club World.

Given IAG’s recent announcement to achieve net zero CO2 emissions by 2050, the group’s response to climate change is likely to feature prominently.

At a minimum, we should have an updated fleet plan for IAG airlines. Hopefully, there will be further details of planned BA lounge refurbishments, a firm timetable for the roll out of its Club Suite and plans for long-haul expansion at London Gatwick.

It is also often the case that developments you expect to be announced aren’t. We have been waiting some time for IAG to implement single Avios account balances across IAG frequent flyer programmes and dynamic pricing of Avios rewards.

You can read a recap of last year’s events here as well as the BA specific announcements from the day.

If there are any announcements of note, we will share them throughout the day on Twitter.

Air France-KLM is also holding its annual investor day tomorrow, 5 November 2019 and Finnair holds its event next Tuesday, 12 November 2019.

Norwegian’s Challenge

At IAG’s third quarter results announcement last week Willie Walsh said of Norwegian that it is “clearly not out of the woods yet” and “they still have a long way to go”.

The Financial Times documents the scale of the challenge for its new CEO Geir Karlsen.

The airline has a debt burden of $6.8 billion. Its credit card companies are holding back funds, depriving the airline of vital liquidity. Like many other airlines, it is also contending with the grounding of the Boeing 737 MAX and some Boeing 787 aircraft.

It has obtained some breathing space by deferring the redemption of two bonds. Other measures to shore up liquidity are on the table such as selling off all or part of its frequent flyer programme.

Qantas “Project Sunrise” Update

Qantas has set itself a hard deadline of December of this year to make a decision whether to order capable of flying from London to Sydney non-stop.

This is subject not only economically viable offers from Airbus and Boeing, but also regulatory approval and agreement with Qantas trade unions.

Qantas CEO Alan Joyce of course has form on not being afraid to play hard ball with Qantas trade unions. The Sydney Morning Herald reports of tensions emerging between Qantas and its trade unions, who are making it clear they will not be boxed in by an arbitrary deadline.

Also of note this week:

SWISS opens a new “Alpine Lounge” at Terminal A, Zurich Airport. (SWISS)

A profile of Virgin Atlantic pilot and photographer Tom Dalton. (Virgin Atlantic)

Late post publication updates:

[Reserved for updates throughout the day]

Lufthansa’s cabin crew union has called for two days of industrial action on Thursday 7 and Friday 8 November 2019. Lufthansa expects significant disruption. (Lufthansa)

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