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International Airlines Group

From Wikipedia, the free encyclopedia

International Consolidated Airlines Group S.A.
Sociedad Anonima
Traded asBMADIAG
LSEIAG
FTSE 100 Component
ISINES0177542018 Edit this on Wikidata
IndustryAviation
PredecessorBritish Airways and Iberia
Founded21 January 2011; 9 years ago (21 January 2011)[1]
Headquarters
Area served
Worldwide
Key people
Antonio Vázquez Romero
(Chairman)
Luis Gallego
(CEO)
Services
RevenueIncrease €25.506 billion (2019)[3]
Increase €3.285 billion (2019)[3]
Increase €1.715 billion (2019)[3]
Number of employees
Increase 64,734 (2018)[3]
Subsidiaries
Websitewww.iairgroup.com

International Consolidated Airlines Group S.A., usually shortened to IAG, is an Anglo-Spanish multinational airline holding company with its registered office in Madrid, Spain, and its operational headquarters in London, England. It was formed in January 2011 after a merger agreement between British Airways and Iberia, the flag carriers of the UK and Spain respectively, when British Airways and Iberia became 100% owned subsidiaries of IAG. Because British Airways was the larger company, its shareholders were given 55% of the shares in the new, merged company.[4][5][6][7]

Since its creation, IAG has expanded its portfolio of operations and brands by purchasing other airlines - BMI (2011), Vueling (2012), Aer Lingus (2015) and Air Europa (expected to be completed in 2020). The Group also owns the Level brand and Avios, the IAG rewards programme.

The company is listed on the London Stock Exchange and the Madrid Stock Exchange. It is a constituent of the FTSE 100 Index and IBEX 35 Index.

History

Iberia and British Airways aircraft tails, early 2010s
Iberia and British Airways aircraft tails, early 2010s

Creation of IAG as BA/Iberia holding company

British Airways and Iberia signed a preliminary merger agreement in November 2009.[8][9][10] In April 2010, British Airways and Iberia signed a full merger agreement, with an intended completion date of late 2010, subject to securing the necessary regulatory approvals.[11][12] The merger between British Airways and Iberia was completed on 21 January 2011, and shares in the new holding company IAG began trading in London and Madrid on 24 January.[13][14][15]

On 6 October 2011, IAG created Iberia Express, a new low-cost airline to operate short- and medium-haul routes from IAG's Madrid hub and provide transfer feed onto Iberia's longhaul network.[16][17] Iberia Express began operations on 25 March 2012.[18][19]

Purchase of BMI (2011)

On 4 November 2011, IAG agreed in principle to acquire British Midland International (BMI) from Lufthansa, in a deal which would increase IAG's share of slots at Heathrow airport from 45% to 54%.[20][21] On 22 December 2011, IAG agreed a binding deal with Lufthansa to acquire BMI for £172.5 million.[22] On 30 March 2012, the purchase was approved, subject to the condition that the combined group divest itself of 12 daily slots and lease two daily slots at Heathrow airport. The acquisition was completed on 20 April 2012, and the BMI fleet and routes were integrated into the British Airways schedule throughout 2012.[23]

Purchase of Vueling, and creation of IAG Cargo (2012)

On 8 November 2012 IAG made a cash tender offer to buy Vueling, a Spanish low-cost airline based in Barcelona. The offer was €7 per ordinary share of Vueling, with the total cost of acquisition anticipated to be €113m. It was funded from internal IAG resources. The reported total assets of Vueling as of 30 September 2012 were €805m and in the nine months to 30 September 2012 it had generated profits before tax of €59m. An increased offer of €9.25 was accepted by the Vueling board on 9 April 2013, and received majority shareholder approval on 23 April 2013. IAG took control of Vueling on 26 April 2013.[24][25]

In December 2012, IAG completed the merger of the cargo operations of British Airways, BMI and Iberia into a single business unit, IAG Cargo.[26][27]

Purchase of Aer Lingus (2015)

In January 2015, IAG made a bid of €1.36 billion for Aer Lingus. This was expected to be accepted, after the rejection of two prior bids.[28] In May 2015, the Irish government agreed to sell its stake in Aer Lingus to IAG,[29] as did the Aer Lingus board in late January 2015.[30] The takeover became irreversible on 18 August 2015.[31]

Creation of LEVEL brand

In March 2017 it was announced that a new low cost longhaul airline named LEVEL was to start operating from Barcelona in June 2017.[32]

On 29 December 2017, it was announced that IAG bought major parts of defunct Austrian leisure airline Niki including 15 Airbus A321 aircraft and traffic rights in Düsseldorf, Munich, Vienna, Zürich and Palma de Mallorca.[33] It is planned to establish a new Austrian subsidiary of Vueling as a replacement for Niki.[33]

Aborted Norwegian takeover, and group fleet orders

In April 2018, it was reported that IAG was considering a takeover of Norwegian, a low-budget competitor to the group,[34] however by early 2019 IAG had fully disposed of its stake in Norwegian.[35]

In June 2019, IAG signed a letter of intent to purchase 200 Boeing 737 MAX aircraft even though at the time of the signing the 737 MAX was still grounded worldwide following the two fatal crashes likely caused by the design of the MCAS system.[36] Aviation analysts have questioned IAG's leadership in making such an order when the 737 MAX design is still being rectified. IAG CEO Willie Walsh, shrugged off the plane's uncertain future. "We’re partnering with the Boeing brand", he said. "That’s the brand that I’m doing business with. That’s the brand that I’ve worked with for years. And it’s a brand that I trust".[37]

At the 2019 Paris Air Show IAG also agreed to purchase 14 Airbus A321XLR aircraft, 8 for delivery to Iberia and 6 to Aer Lingus, with options for a further 14 of the aircraft.[38]

Purchase of Air Europa (2019)

In November 2019, IAG announced that it planned to acquire Air Europa from Globalia, for €1 billion. The deal, funded by external debt, is expected to be completed in the second half of 2020, subject to regulatory approval.[39]

Corporate affairs

IAG current passenger fleet size (excluding cargo) - May 2020
IAG current passenger fleet size (excluding cargo) - May 2020

Overview

IAG is incorporated as a Sociedad Anónima in Spain, where the company board meetings are held, and is domiciled in Spain for tax purposes.[40][41][42][43] IAG has a primary listing on the London Stock Exchange and has been a FTSE 100 constituent since 24 January 2011.[44][45] It has secondary listings on the Madrid, Barcelona, Bilbao and Valencia stock exchanges,[46][47] and has been a constituent of the IBEX 35 index since 1 April 2011.[48]

Qatar Airways is a minority shareholder in IAG, having first invested in 2015, buying 9.99% of the company. Qatar has steadily increased its shareholding since then, and held 25.1% of the shares as at February 2020.[49]

IAG's operational headquarters, which controls the management of both its British and Spanish subsidiaries, are at the Waterside building in Harmondsworth, Greater London.[50]

Group structure

The structure of the main operating companies is:[51][52]

Members Affiliates Non-IAG affiliate members
Republic of Ireland Aer Lingus[53] N/A Republic of Ireland Aer Lingus Regional (Operated by Stobart Air)
United Kingdom British Airways United Kingdom BA CityFlyer South Africa Comair (11.5% stake)
Denmark SUN-AIR (franchise)
Spain Iberia Spain Iberia Express Spain Air Nostrum (franchise, trading as Iberia Regional)
Spain Level A N/A N/A
Spain Vueling N/A N/A
Other subsidiaries

A including Level France and Level Austria.

Group business trends

The key trends for the International Airlines Group over recent years are shown below (as at year ending December 31):

2011 2012 2013 2014 2015 2016 2017 2018 2019
Group financial trends
Turnover (€m) 16,339 18,117 18,675 20,170 20,350 22,567 22,972 24,406 25,506
Profit before tax (€m) 527 −997 227 828 1,801 2,362 2,493 3,487 2,275
Net profit (€m) 485 −923 147 1,003 1,516 1,952 2,009 2,897 1,715
Basic EPS (€ cents) 31.1 −51.0 6.6 48.2 73.5 93.0 95.8 142.7 86.4
Group operational trends
Number of passengers (m) 51.7 54.6 67.2 77.3 88.3 100.7 104.8 112.9 118.3
Cargo carried (000s tonnes) 661 680 701 702 682
Number of aircraft (operational)(at year end) 529 548 546 573 598
Notes/sources [55] [55] [55] [55] [3][55]

In 2012 it was reported that British Airways' profits had been wiped out by Iberia's losses, and that the Spanish airline was in a fight for its survival.[56] By 2013, Iberia had lost a billion euros, requiring IAG CEO Willie Walsh to defend the IAG merger.[57] After further losses, IAG's balance sheet was in deep deficit as Iberia fought low-cost competition and a recession, and Walsh admitted that British Airways should perhaps have postponed the merger, saying, "If I'd known the Spanish economy was going to deteriorate to the scale that it did, we may have delayed the decision but ultimately I believe the merger is the right thing".[58] From 2014 on, Iberia returned to profitability, showing Walsh's predictions had been justified.[59]

Operations

Subsidiary airlines

British Airways, Iberia, Aer Lingus, Vueling and LEVEL operate under their separate brand names.[60]

For details of the current aircraft operated by the group, see the fleet details for each of the main operating subsidiaries - Iberia, British Airways, Aer Lingus, and Vueling. The entire company serves around 200 destinations.[60][61]

Group frequent-flyer programme

IAG operates the Avios frequent-flyer programme, which was created from the merger of the Air Miles, BA Miles, and Iberia Plus Points schemes on 16 November 2011.[62] Avios points are the frequent flyer currency of Aer Lingus, British Airways, Iberia, and LEVEL,[63] and can also be used for travel within the Oneworld alliance including the likes of Vueling, LATAM, Finnair, etc.[64] A restructure in 2015 meant that all of IAG's affiliated loyalty programmes which use Avios, including Avios Travel Reward Programme, British Airways Executive Club, and Iberia Plus, were transferred to Avios Group, an IAG subsidiary.[54][65]

It was announced in July 2018, that Avios.com would close to British Airways Executive Club members, with all points automatically transferred to British Airways.[66]

References

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External links

This page was last edited on 19 November 2020, at 19:48
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