International Airlines Group announced its half-year results today, Friday 2 August 2019.
IAG is a group that prides itself on consistency, so there are no great surprises in the numbers.
Operating profit for the 2nd quarter increased to €960m compared to €900m in the previous year. Operating profit for the half year was down however to €1,095m from €1,240m.
The results are announced against a busy news background for IAG airlines, notably the threat of industrial action at BA and a proposed fine of £183m from the Information Commissioner’s Office following the data breach at ba.com in 2018.
Overall, markets are generally very steady with pockets of weakness as expected in Argentina and Brazil and over-capacity in China.
BA Industrial Relations
Both IAG CEO Willie Walsh and BA CEO Alex Cruz declined to give a running commentary on negotiations with the pilots union BALPA on pay negotiations with BA pilots.
Talks are currently taking place between BA and BALPA at the conciliation service ACAS. Willie Walsh made it clear that IAG is not getting involved in negotiations and it is a matter for BA to deal with – this is consistent with IAG’s structure from its founding in 2011.
Whilst Willie Walsh paid tribute to the professionalism of BA pilots, reading between the lines IAG seems conscious of not setting a precedent for other BA workgroups and employees of other IAG airlines. BA simply paying to make the matter go away would not be palatable to IAG who have always said that cost discipline must be maintained.
Willie Walsh did also intimate that the resources of other IAG airlines may be called upon in the event of industrial action at BA. Though, it is hard to see what can be done at the peak of the summer season. Trade unions representing employees of other IAG airlines would also not be prepared to cross the boundary of assisting in breaking another airline’s strike.
Aircraft Orders & Deliveries
Willie Walsh once again reiterated his disappointment with Airbus on late deliveries with Airbus and described talks with Boeing as constructive.
There’s no indication of when IAG’s Letter Of Intent to buy The Boeing 737 MAX will be converted into a firm order. However, some deliveries may be accelerated into 2022:
And just to remind you that the recent aircraft orders that we have, including the LOI with Boeing is absolutely consistent with the planned aircraft deliveries that we gave you at Capital Markets Day. In fact, as you can see from this, we still have an outstanding aircraft to be decided on. So we’re pleased so far with what we’ve ordered, there is more work that we need to do. Disappointed, as you’ve heard me say previously, with the performance of Airbus, very poor delivery from Hamburg on the A321. It’s not just for us, as you know, I’m sure by now you’ve heard every airline that is excited about taking the 321LR express huge disappointment about the delays that they encountered.
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We need Airbus to improve their performance. And they need to get working on that very quickly. Because quite honestly, the delays that we’re seeing are just completely unacceptable. And it is impacting on the growth plans that we have. That’s particularly true of we want to do with Aer Lingus on transatlantic. And we’re having very, very constructive discussions with Boeing and the LOI that we signed, talked about deliveries between 2023 and 2027, we’re actually looking to see if we can get some of those deliveries in 2022. And the engagement with Boeing has been very positive and very constructive.