International Airlines Group 2019 Capital Markets Day

A wrap up of the major themes and trends from International Airlines Group’s annual Capital Markets Day event.

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International Airlines Group
International Airlines Group

International Airlines Group, the parent company of Aer Lingus, British Airways, Iberia, LEVEL and Vueling, held its annual Capital Markets Day today, Friday 8 November 2019.

The event followed a different format to previous years in that there were no individual airline presentations, so there’s not much news on that front.

You can download the full slide deck here. If you want to compare notes to what was announced 12 months ago, here’s our wrap up of last year.

The one significant piece of BA related news was the first published plan for the roll-out of its Club Suite at London Heathrow, which you can view here.

The roll-out of the new seat is crucial to improving Net Promoter Scores across for Club World. Whilst improvements to amenities and catering have delivered higher NPS scores in other cabins, the impact in long-haul premium cabins has been quite limited.

British Airways Net Promoter Scores 2017-2019
British Airways Net Promoter Scores 2017-2019 (Image Credit: International Airlines Group)

In terms of over-arching themes and trends for the day.

IAG Is Slowing Down Planned Growth

As last year’s Capital Markets Day, IAG said that it would grow its Available Seat Kilometres by 6% on a compound basis by 2023.

This will now be at a rate of 3.4%. In 2020, Aer Lingus, BA and Iberia will grow at a rate of 2-3%. However, there will be no growth at all for Vueling, where demand is softening in Barcelona.

IAG Is Moving To Greater Centralisation

Since its formation in 2011, the basic structure of IAG has been to centralise back-office functions, with day-to-day operations left to individual airlines.

A theme from last year was that IAG is placing more emphasis on looking at the relative positioning of its airlines against rivals in certain “demand spaces”. By its own admission, in certain market segments designed by IAG, there is scope to improve against competitors:

IAG Airline Brand Positioning
IAG Airline Brand Positioning (Image Credit: International Airlines Group)

Many functions such as the design of aircraft cabins, in-flight service design and airline branding which have been hitherto left to individual airlines will come under central direction from IAG.

Other activities such as pricing, revenue management, sales and distribution, and loyalty will move entirely to IAG. This could, for example, result in IAG implementing a single booking engine across all of its airlines.

Group Loyalty – Avios

The Avios currency and the various frequent flyer programmes that adopt them are an extremely important part of IAG, both in terms of generating revenues in their own right and driving loyalty to IAG airlines.

IAG is also exploring implementing a single loyalty programme across all of its airlines, as hotel groups do. The big difference between IAG airlines and hotels is that separate hotel brands tend not to dominate specific geographic markets.

In the UK, the BA Executive Club has a very high profile and replacing it with a new IAG-wide name could result in significant brand dilution. (One way it might get around that is an interim partial rebrand of individual schemes based around a new name, before a wholesale transfer to one programme.)

Dynamism and greater personalisation is becoming a stronger theme (eg no e-mails offering redemptions you’re not interested in!), whilst maintaining some of the prominent fixed milestones that customers can easily identify (eg the tiers of the BA Executive Club).

IAG is also looking at more opportunities to redeem Avios. Options to reduce the amount of cash payable, such as short-haul redemptions with a £1 payment and part-pay with Avios which have proven very popular. This is even where, on a scientific basis, they are not the best value use of Avios. However, it does create an important perception that Avios are easy to redeem.

At some point all IAG frequent flyer programmes will move to a single platform with a single account balance as Aer Lingus and Vueling do at the moment. This will enable, for example, a member of the BA Executive Club to use their Avios when paying for food on Vueling.

IAG is also in active discussions to add new Avios partners, particularly in the financial services sector. As you can’t fail to notice when spending any time in London, a lot of new “fin tech” companies have to spend significant amounts of advertising to acquire new customers, and partnering with Avios is seen as a way of reducing the cost of customer acquisitions.

IAG’s Fleet Plans

Over the past few months, IAG airlines have announced orders for new aircraft, notably the Airbus A321 XLR for Aer Lingus and Iberia, the Boeing 737 MAX for BA at Gatwick and Vueling, and the Boeing 777-9 for BA.

Taking into account the above orders, IAG’s fleet plan is largely unchanged. BA still plans to retire the Boeing 747 by 2024 and there have been some very slight changes to the planned pace of retirement.

BA will also begin retiring some Boeing 777-200 aircraft. This will begin next year with three “odd ball” aircraft being retired. 8 Boeing 777-200 aircraft will be left in service by 2029.

IAG still plans to order the Boeing 737 MAX, citing the need for competition between Airbus and Boeing though has yet to convert its Letter Of Intent into a firm order.

International Airlines Group Fleet Plan
International Airlines Group Fleet Plan (Image Credit: International Airlines Group)
International Airlines Group Short-Haul Fleet Plan To 2029
International Airlines Group Short-Haul Fleet Plan To 2029 (Image Credit: International Airlines Group)
International Airlines Group Long-Haul Fleet Plan To 2029
International Airlines Group Long-Haul Fleet Plan To 2029 (Image Credit: International Airlines Group)
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International Airlines Group To Acquire Air Europa

International Airlines Group has announced it is to acquire Air Europa for €1 billion in cash.

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Air Europa Boeing 787 Dreamliner Aircraft
Air Europa Boeing 787 Dreamliner Aircraft (Image Credit: Air Europa)

When International Airlines Group announced its third quarter results last Friday, 1 November 2019, Willie Walsh offered some warm words to one of its rival airlines Delta.

Willie praised Delta for its strategic move in acquiring 20% of LATAM airlines, thereby snatching it out of the Oneworld alliance. It also all but ended the prospect of further co-operation between LATAM and IAG airlines, which had been faltering due to regulators in Chile denying approval for a revenue-sharing joint-venture.

There was a hint that more details of IAG’s plans for Latin America were to come at its Capital Markets Day this Friday 8 November 2019, but no-one could have guessed that IAG had a plan up its sleeve.

Today, Monday 4 November 2019, IAG has announced it has reached an agreement to acquire Air Europa for €1 billion in cash.

This is what IAG would term a “transformational deal”. It significantly increases its presence at Madrid, by some 50%.

Whilst IAG making this move as revenge on Delta makes for a good story, this deal is likely to having been brewing for some time as it is highly unlikely that due diligence could be completed and terms agreed within a little over a month.

There are competition concerns. It is enviable that remedies will be demanded by regulators and there can be no certainty that these will be palatable to IAG.

About Air Europa

Readers in the UK will be forgiven for not knowing much about Air Europa.

It is the third largest airline in Spain after Iberia and Vueling, operating a fleet of 66 aircraft, principally to destinations in mainland Europe and Latin America. It has a relatively limited presence in the UK, flying from London Gatwick to Madrid.

Air Europa serves a number of destinations in Latin America not already served by IAG airlines such as Cordoba in Argentina and Recife in Brazil.

Air Europa is currently a member of the SkyTeam and will leave the alliance after its acquisition by IAG.

IAG’s Acquisition Of Air Europa

IAG has confirmed the following details this morning:

IAG will initially retain the Air Europa brand and it will operate as subsidiary of Iberia. IAG views the airline as operating as a “value carrier” in the mould of Aer Lingus. This suggests that it won’t be fully integrated into Iberia. However, as Iberia has a stronger brand presence in Latin American markets, it is likely it will adopt a brand name closely associated with Iberia.

IAG Air Europa Brand Positioning
IAG Air Europa Brand Positioning (Image Credit: International Airlines Group)

Like Aer Lingus, Air Europa is unlikely to join the Oneworld alliance as a full member but may join as a “Oneworld Connect” partner.

IAG is keeping its cards close to its chest as to how its operations will be ultimately integrated into the group. When IAG acquired bmi in 2012 some in IAG pressed for the airline to be kept separate from BA and IAG secured productivity improvements from BA pilots as condition of its integration into BA. IAG may do the same here.

There’s also little fleet commonality with Iberia as Air Europa operates the Boeing 737 and Boeing 787, neither of which are used by Iberia.

IAG Air Europa Fleet
IAG Air Europa Fleet (Image Credit: International Airlines Group)
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International Airlines Group 2019 Half Year Results

International Airlines Group has announced its half year results and provided a strategic update on its airlines.

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CGI Image of Heathrow Airport Masterplan 2050
CGI Image of Heathrow Airport Masterplan 2050 (Image Credit: Heathrow)

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:

International Airlines Group Half Year Results 2019 (Image Credit: International Airlines Group)

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.

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.

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An Update On International Airlines Group’s Fleet Plans

A survey of the fleet renewal and expansion plans for the airlines of IAG following orders placed at the Paris Air Show.

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Aer Lingus & Iberia Airbus A321neo XLR aircraft, BA Airbus A321neo aircraft, BA Boeing 777-9 aircraft.
Aer Lingus & Iberia Airbus A321neo XLR aircraft, BA Airbus A321neo aircraft, BA Boeing 777-9 aircraft. (Image Credit: Airbus, British Airways, Boeing)

IAG airlines are not normally ones to make headline grabbing aircraft orders at air shows.

Such muscular displays of buying power are normally left to others. This year, however, IAG stole the show with a Letter Of Intent to buy 200 Boeing 737 MAX 8/10 aircraft from Boeing. These have been earmarked for BA at London Gatwick, LEVEL and Vueling.

If it becomes an order, it will be IAG’s single biggest aircraft order in its 8 year history and it will more than exceed IAG’s current short-haul growth ambitions. According to press reports, Airbus did not get the chance to tender against Boeing, and would like to make a counter-offer to IAG.

This week’s news, and other recent announcements this year, does give a little more colour on IAG’s plans to renew and grow its fleet.

To recap, at IAG’s Capital Markets Day last November, IAG set out its plan to grow its short-haul fleet from 386 to 467 aircraft by 2023. Long-haul aircraft are expected to increase from 201 to 249 by 2023.

However, in terms of how this is done, much of this growth – some 128 short-haul and 44 long-haul aircraft – was left as “to be decided”.

International Airlines Group Capital Markets Day
International Airlines Group Capital Markets Day (Image Credit: International Airlines Group)

Taking account of recent announcements, we now know of the following plans by airline:

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IAG Signs Letter Of Intent For 200 Boeing 737 Aircraft

IAG has signed a Letter Of Intent to acquire 200 Boeing 737 aircraft for delivery between 2023 and 2027.

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British Airways Boeing 737 in Landor livery
British Airways Boeing 737 in Landor livery (Image Credit: British Airways)

The Boeing 737 may make a return to British Airways at London Gatwick as its parent company International Airlines Group has signed a Letter of Intent with Boeing to acquire 200 Boeing 737 MAX aircraft.

It is important to emphasise that this is not a firm order for aircraft – which is no doubt subject to the aircraft receiving regulatory approval to return to service.

IAG anticipates an order of 200 aircraft for delivery between 2023 and 2027. The order will be a mix of Boeing 737 MAX 8 and Boeing 737 MAX 10 aircraft. The 737 MAX 8 seats up to 178 passengers in a two-class configuration. The 737 MAX 10 jet can seat up to 230 passengers.

IAG anticipates that the aircraft would be used by British Airways at London Gatwick, LEVEL and Vueling.

It is noteworthy that IAG is prepared to introduce another type of short-haul aircraft into its fleet when it has made much of standardising the configuration of Airbus A320 aircraft to maximise efficiencies and allow aircraft to be moved between different airlines in the group.

That IAG has specifically earmarked the aircraft for BA at Gatwick and its low cost brands LEVEL and Vueling may signal its intentions for the aircraft. All three are likely to be competing against each other to acquire the aircraft and it is highly likely that the internal configuration will be standardised as much as possible.

IAG had previously advised that BA short-haul at Gatwick would be an exclusively Airbus A320 operation. The Boeing 737 originally operated for BA from 1980 until the last aircraft was retired at Gatwick in September 2015.

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IAG Orders Airbus A321XLR Aircraft For Aer Lingus & Iberia

International Airlines Group has announced it has ordered 6 Airbus A321XLR aircraft for Aer Lingus and 8 aircraft for Iberia.

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Airbus A321XLR aircraft render
Airbus A321XLR aircraft render (Image Credit: Airbus)

International Airlines Group has announced it has ordered 6 Airbus A321XLR aircraft for Aer Lingus and 8 aircraft for Iberia.

The first aircraft will be delivered from 2023. The group has also secured options for a further 14 aircraft, which could be used by any airline in the group.

This is a clear vote of confidence by IAG in the Airbus A321XLR aircraft.

IAG is now doubt attracted by is efficiency and commonality with the Airbus A320 series. It is noteworthy that IAG is keen to emphasise it will offer the same passenger comforts as existing wide body aircraft.

For both Aer Lingus and Iberia, IAG emphasise that the aircraft will be used to facilitate transatlantic expansion.

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International Airlines Group 1st Quarter Results

IAG has released its financial results for the 1st quarter of 2019 and provided a strategic update on the group.

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International Airlines Group and its subsidiaries
International Airlines Group and its subsidiaries

International Airlines Group has today, Friday 10 May 2019, reported an operating profit of €135m for the first quarter of 2019.

This compares to a profit of €340m for the previous year. The fall in profit is principally due to the timing of the Easter holidays, but also fuel prices and increased capacity in Europe.

IAG’s results compare to widening losses of €303m at Air France-KLM and €344m at Lufthansa. However, of IAG’s five principal airline brands, only BA was profitable in the quarter.

The first quarter results announcement is a relatively quiet one for news and strategic updates, but IAG provided the following commentary to analysts:

Market Performance

In terms of market performance, UK based demand and North Atlantic routes are holding up well.

Weak areas are demand from some countries in mainland Europe and routes to Argentina, Brazil, Hong Kong and South Africa.

In the case of Hong Kong, IAG has cited increased capacity from Europe to the region by carriers in mainland China. Cathay Pacific has also added significant capacity to London and other airports in mainland Europe in recent years. Weakness in other regions is principally due to macroeconomic factors. Argentina and Brazil are expected to improve later in the year.

IAG has already cut capacity to South Africa by suspending Iberia’s route from Madrid to Johannesburg and moving four weekly BA Boeing 787 flights from Heathrow to Johannesburg to Mumbai. It is unlikely that these flights will return for the winter season.

Elsewhere, LEVEL is performing well and is profitable in Barcelona. However, performance in Paris Orly is behind expectations. IAG has cited competitive activity in the market.

As for JetBlue’s plans to launch flights from Europe to Boston and New York, IAG is adopting a wait and see approach until JetBlue confirms which airports it will operate from.

Acquisitions

Unsurprisingly, IAG has no interest in bidding for any of part of Thomas Cook’s airline business.

Lufthansa is a likely candidate to acquire Thomas Cook’s Condor airline in Germany. Sky News has also reported that Virgin Atlantic has expressed an interest in acquiring Thomas Cook’s long-haul business in the UK.

In terms of future acquisitions, IAG had a standard response that there’s no activity at the moment. IAG confirmed that there no regulatory reasons why it could not make another bid for Norwegian, but has no plans to do so.

British Airways

During the full year results presentation IAG were asked repeatedly about industrial relations at BA and pay negotiations with its trade unions.

There’s been little news since, and all IAG would say today is that negotiations were ongoing.

IAG expects to receive further compensation from Rolls-Royce due to the grounding of Boeing 787 aircraft for additional engine checks and maintenance. BA has today announced a number of tactical cancellations up until the end of August.

What wasn’t said..

There were no updates on ongoing regulatory issues, such as Aer Lingus seeking approval to join the AA/BA transatlantic joint-venture and the review by the Competition & Markets Authority of the joint-venture.

There were also no updates on regulatory approval for the joint-venture between BA, Iberia and LATAM, which subject to an appeal in Chile. Nor were there are any updates on investigations in to the data breach of ba.com last year.

International Airlines Group Full Year Results

IAG has provided a strategic update on its airlines following its annual results.

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Render of British Airways Boeing 777-9 aircraft
Render of British Airways Boeing 777-9 aircraft (Image Credit: Boeing)

International Airlines Group, the parent company of Aer Lingus, BA, Iberia, LEVEL and Vueling announced its annual results today, Thursday 28 February 2019.

All IAG airlines reported a healthy increase in operating profits for the year. IAG announced an annual operating profit of €3,230m, an increase of 9.5%. By airline this was £1,952m for BA, €305m for Aer Lingus, €437m for Iberia and €200m for Vueling.

Aircraft Order

The big headline announcement has been an order for 18 Boeing 777-9 aircraft with BA, with options for an additional 24 aircraft.

This, together with an existing order for 18 Airbus A350-1000, 4 Boeing 777-300 and 12 Boeing 787-10 aircraft effectively settles BA’s plan to replace the Boeing 747. The Boeing 777-9 will also replace 4 Boeing 777-200 aircraft. It does also provide for a healthy amount of growth at BA.

However, there are still a number of aircraft to be ordered to meet the group’s overall growth ambitions and the planned retirement of Boeing 777-200 aircraft. IAG CEO Willie Walsh said that there were aggressive pitches from all of Airbus, Boeing, General Electric and Rolls-Royce and there is still a lot of play for in terms of future orders.

IAG confirmed that it had looked at second-hand aircraft, but this had been discounted. Whilst nothing was said about the Airbus A380, this does seems to suggest that the prospects for BA acquiring any more aircraft, whether new or second-hand, are very remote.

International Airlines Group Fleet Plan - February 2019
International Airlines Group Fleet Plan – February 2019 (Image Credit: International Airlines Group)

BA Cabin & In-Flight Product Investments

The Net Promoter Score, which IAG uses to measure customer satisfaction, is said to be continuing to improve at BA.

It improved in 2018 over 2017 and is reported to be continuing to improve this year.

Not much more was given away about the new Club World seat and BA’s plans to retrofit the seat to existing aircraft, beyond what was said at last November’s Capital Markets Day.

There is an obvious element of expectations management as a number of airlines have experienced difficulties securing seats from manufacturers. Should additional manufacturing capacity become available, then the programme to retrofit seats will be accelerated.

There are continued references to improvements to Euro Traveller without specifying what they are. IAG still sees scope for profit margin growth at BA and future product investments are likely to remain very targeted.

BA Gatwick

An additional long-haul aircraft will be placed at Gatwick later this year, which will provide for some growth.

Continued growth at Gatwick as the slots BA acquired from Monarch are converted to long-haul use is likely to be at a very steady pace.

Continue reading “International Airlines Group Full Year Results”

IAG Abandons Bid For Norwegian

IAG has confirmed that it will not bid to buy Norwegian and it will sell its stake in the airline.

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Norwegian Boeing 787 at London Gatwick
Norwegian Boeing 787 at London Gatwick (Image Credit: Norwegian)

International Airlines Group has officially confirmed that it has abandoned its attempt to bid for Norwegian.

IAG issued a short update to the stock exchange shortly before 12:30 GMT on Thursday 24 January 2019 to confirm that it will not bid to buy the airline. It will also sell its shareholding of just under 4%.

Last April, IAG acquired a stake in Norwegian with a view to making a bid for the airline.

IAG always maintained that it would not make a hostile bid for the airline. It had made conditional offers in private which had not been accepted by Norwegian.

Due to the size of their shareholdings no bid could be successful without the support of its co-founders, Bjørn Kjos and Bjørn H. Kise who own a joint 27% stake in the airline.

IAG has praised Norwegian for proving there is a market for low lost long-haul travel but has said that Norwegian’s growth rate is unsustainable. Norwegian is currently moderating its growth as well as undertaking cost-saving measures and reshaping its route network.

It has to be said that given the number of overlapping city pairs between IAG airlines and Norwegian, and increased regulatory scrutiny of joint-ventures, it was unlikely a bid could succeed without significant slot divestures.

This means that IAG is likely to pursue growth in low cost long-haul through its own brand LEVEL, and a new aircraft order for LEVEL is expected shortly.

Norwegian issued the following statement in response:

“Norwegian’s plans and strategy remain unchanged. The company’s goal is to continue building a sustainable business to the benefit of its customers, employees and shareholders.”

Chairman of the Norwegian Board, Bjørn Kise.

A wrap up of IAG’s Capital Markets Day 2018

Here are the major themes and announcements from IAG’s annual Capital Markets Day.

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International Airlines Group Airlines & Businesses
International Airlines Group Airlines & Businesses

International Airlines Group held its annual Capital Markets Day today, Friday 2 November 2018.

If you are so inclined, you can download the whole presentation of no less than 174 slides from the IAG website.

IAG prides itself of the consistency of its strategy, so there are no major surprises. The general theme is of IAG airlines consolidating their positions at their respective hubs, investing in profitable growth, and operational efficiencies.

However, there were some differences from previous years:

IAG is pursuing stronger airline brand differentiation

IAG has always distinguished itself as being a group with a portfolio of distinct brands, with operational independence.

Its brands to date have largely been defined by the geographic location of their respective hubs.

There seems to be more emphasis on brand differentiation and relative strength. This does not mean IAG will be changing its very disciplined approach to cost and investment. But there is a clear acknowledgement that in the current market, its brands can’t be everything to everyone.

BA and Iberia are the designated premium brands. Aer Lingus and Iberia Express are deemed “value carriers”. And Vueling and LEVEL are the low cost airlines.

It is noteworthy for an internal research exercise where IAG has identified 7 different market segments, there are some sections of the market where easyJet and Norwegian are positioned above BA in terms of perception. For example, BA is positioned below easyJet in the short-haul “Smooth Flying” segment and below Norwegian in the “Business on a Budget” segment.

International Airlines Group Capital Markets Day
International Airlines Group Capital Markets Day (Image Credit: International Airlines Group)

International Airlines Group Capital Markets Day 2018
International Airlines Group Capital Markets Day (Image Credit: International Airlines Group)

In previous Capital Markets Days IAG has referred to knowing where it “stretch the [BA] brand” and where “the breaking points are”. It seems clear these have been tested in recent years.

With 1-2 cabins, it is far easier for easyJet and Norwegian to position themselves. For an airline with the network and number of cabins it has, BA needs broad appeal across price sensitive and premium business and leisure passengers. However, it seems clear that BA, and Iberia, will pursue sharper premium positioning in the market,

IAG is increasing its growth plans

Subject to market conditions, there are ambitions to grow IAG’s fleet from 386 short-haul aircraft this year to 467 in 2023. Long-haul aircraft are expected to increase from 201 this year to 249 in 2023.

International Airlines Group Capital Markets Day
International Airlines Group Capital Markets Day (Image Credit: International Airlines Group)

International Airlines Group Capital Markets Day
International Airlines Group Capital Markets Day (Image Credit: International Airlines Group)

Taking into account existing aircraft orders and planned retirements, IAG will need to exercise options or place new orders for 128 short-haul aircraft and 44 long-haul aircraft for delivery by 2023.

For BA alone, it plans to retire 36 Boeing 747s by 2024, and future deliveries of 16 Airbus A350-1000 and 12 Boeing 787-10 aircraft are not enough to replace these.

Given IAG plans to add increase long-haul aircraft by 16 in 2020 and 13 in 2021, we could be very many new routes announced by IAG airlines in the next 12 months.

In terms of major developments by airline:

Aer Lingus

As is expected, Aer Lingus is focused on growing its North American route network from Dublin, principally with the aid of the Airbus A321 Long Range aircraft.

The first 3 of 14 aircraft will be delivered in 2019.

Aer Lingus confirmed that it will introduce a new brand identity and staff uniforms. It will also reintroduce a form of short-haul business class “Aer Space” on some routes. This was planned before it was acquired by IAG, but had been put on the back burner.

Whilst Aer Lingus referred to successful partnerships with Alaska Airlines and JetBlue there is no sign of it imminently joining the transatlantic joint-venture with American Airlines or BA. It is still awaiting regulatory approval. There is also no date on it rejoining Oneworld. Given its relative strength in the US local market, it seems keen to preserve its relative independence and “value carrier” status.

One idea that may be trialled on Aer Lingus is an “on-demand” restaurant style dining where customers can pre-order food items on their personal devices.

British Airways

There were a number of BA announcements, all detailed here.

The overarching theme is getting BA ready for its centenary celebrations in 2019 and ensuring its putting its best foot forward.

Before BA officially markets its centenary in August 2019, it will have unveiled its new Club World cabin and Airbus A350-1000 aircraft and introduced new catering and amenities in World Traveller Plus and First Class. There are also, as yet undefined, catering improvements planned for EuroTraveller and BA lounges.

Iberia

Iberia seems largely focused on consolidating its position in Latin America and its core markets such as Argentina, Brazil, and Chile.

There’s been no mention of further growth to Asia or exploring new opportunities in Africa.

LEVEL

LEVEL will remain a “virtual” airline using assets of other airlines in the group, such as Iberia for Barcelona.

Whilst LEVEL does have ambitions to grow substantially over the next five years, it has not announced any new bases yet for 2019. Based on comments made by Willie Walsh last month, Paris Orly seems to not have started off as quickly as Barcelona. As a new CEO has started only very recently at LEVEL, it seems to be consolidating its existing routes before announcing any more.

Vueling

Vueling is largely focused on consolidating its operation in Barcelona after a difficult summer due to Air Traffic Control disruption in Europe due to strikes in Marseille which have been a deep source of frustration to IAG.

It has recently introduced new fare types and removed its “Excellence” business class.

Avios

The one glaring omission is that there was very little mention of Avios at all.

It is known that initiatives have been underway to introduce a single Avios bank balance across IAG frequent flyer programmes and dynamic pricing of Avios rewards, but all mentions of Avios were conspicuously absent. As Avios is part of a dedicated business unit in IAG this is quite unexpected.