British Airways boss warns of threat to open skies agreement

By Phil Davies | 06 March 2015 at 08.17 GMT
A row between US carriers and Gulf airlines could threaten an open skies agreement that aims to liberalise the rules and regulations of the international aviation industry.

The warning over protectionism came from International Airlines Group chief executive Willie Walsh (pictured) in the British Airways parent company’s annual report.

He also reiterated his interest in Aer Lingus, which remains subject of a £1 billion bid from IAG despite opposition from some quarters in the Irish government.

“We set up IAG with the express purpose of playing a lead role in
the consolidation of our industry,” he said.

“Consolidation remains mostly focused within geographic regions and is likely to remain that way while ownership controls in some markets remain in place.

“We are a long way from the fully deregulated global industry I would like to see. It is also worrying to see protectionism rearing its head again, notably in the US where some carriers complain the open skies arrangements are benefitting non-US airlines, most particularly the Gulf carriers.”

Walsh added: “We continue to look for opportunities, nonetheless, and our success to date has given us the confidence to look
at adding a new airline brand to the business, namely Aer Lingus. Following its own restructuring, the Irish carrier has made impressive progress and it has built a particularly interesting transatlantic network, using Dublin
 as a hub.

“We think its business model fits very neatly with IAG and being part of the group would, we believe, bring big benefits for both Aer Lingus and our shareholders.”

Walsh also warned passengers not to expect lower fares following the sharp fall in oil prices since last summer.

He said that it is “essential we remain focused on profitability and on recovering some of the historic cost 
of higher prices”.

Wals added: “We will continue to offer customers great value for
 money, but that does not mean we will automatically pass on all the benefit we get because some of that return must go to shareholders who have supported us through tougher times and a period of significant investment in new aircraft.”

The report reveals that Walsh’s salary and other benefits came to £6.4 million in 2014, up from almost £5 million in 2013 following the financial turnaround at Spanish arm Iberia.


Sourced from Travel Weekly


IAG profits soar as Iberia moves into black

British Airways parent International Airlines Group (IAG) saw operating profits soar by more than 80% last year as Iberia moved into the black.

IAG reported an operating profit of almost €1.4 billion against €770 million in 2013.

The group, which is attempting to acquire Aer Lingus for £1 billion, expects operating profits to rise to more than €2.2 billion this year, based on capacity growth of approximately 5.5%.

Iberia’s 2014 operating profit of €50 million compared with an operating loss of €166 million in the previous year following a €260 million restructuring involving more than 4,500 job losses.

IAG chief executive Willie Walsh said: “The airline’s turnaround has been remarkable, both financially and operationally, and we’re very proud of its achievement especially its strong cost discipline.

“In 2013 we said our intention was for Iberia to break even in 2014 and it has fulfilled that promise.”

BA’s operating profit came in at €1.2 billion, up from €762 million in 2013, “which shows significant progress towards its long term targets,” Walsh said.

IAG’s Spanish low cost carrier Vueling’s operating profit edged up by €2 million to €141 million with the airline focusing on flexible growth, according to Walsh.

Walsh said: “We’re reporting strong full year results with an operating profit before exceptional items of €1,390 million which is up 80.5%. Total revenue was up 8% [to €20 billion] with non-fuel costs up 7% and fuel costs up 0.6% on capacity growth of 9.3%.

“We achieved a strong unit cost performance, down 4.1%, through increased productivity, supplier cost savings and lower fuel unit costs. The latter was boosted by the introduction of more efficient aircraft into our fleet and lower fuel prices in the last quarter of the year.

“However, the positive effect of the oil price reduction has been partly offset by hedging and significant currency impact.

“In the quarter, we made an operating profit before exceptional items of €260 million which is up from €113 million last year.

“Revenue for the quarter was up 9.9%. Non-fuel costs were up 10.5% and fuel costs decreased by 0.4% on capacity growth of 5.8%.”

Sourced from Travel Weekly

IAG facing opposition to Aer Lingus takeover

By Phil Davies,

British Airways owner International Airlines Group is reported to be struggling to overcome stiff opposition to its €1.36 billion takeover offer for Aer Lingus.

Irish politicians and unions are lining up to condemn the deal despite five-year pledges offered by IAG on maintaining routes between Heathrow and Ireland.

The Irish government, with an eye on an election in 2016, appears to be wary of supporting a buyout.

getAsset.aspxTransport minister Paschal Donohoe declared himself dissatisfied this weekend after a second round of meetings between IAG and the government, the Times reported.

“We, as a shareholder, remain to be convinced regarding the merits of what they’re putting forward,” he said.

Aer Lingus’s shares have dwindled from €2.45 to €2.21 over the past two weeks, indicating scepticism on the stock market over whether the €2.55-a-share takeover can go ahead.

The Irish state owns 25% of Aer Lingus with a further almost 30% held by Ryanair, which is yet to declare its hand.

A senior government source told Reuters that IAG would need to offer more than a five-year guarantee on the future of services between London and Dublin, Shannon and Cork.

“If IAG are going to do something, they have to do it very quickly if the entrenched positions people have been forced to take are to be unwound,” the source said.

The governing coalition comprises Fine Gael and Labour, which has close links to unions. At a recent meeting of the Labour party, all 20 of the speakers opposed the deal.

Sean Kenny, a Labour party TD [MP] for a Dublin constituency, told Reuters: “We would still be of the view that the state should retain its share until we see something that would alter the situation.”

The Impact union has warned that 1,200 jobs could go at Aer Lingus if the deal goes through. IAG has refused to offer any commitments on employment, but argues that a deal could be beneficial to Dublin’s position as a transfer hub.

Sourced by Travel Weekly

Mixed picture in January for Aer Lingus and easyJet

Mixed picture in January for Aer Lingus and easyJetAer Lingus entered the new year with reduced short-haul carryings but a rise in long-haul passengers.

The Irish carrier, at the centre of a takeover bid by British Airways owner International Airlines Group, saw total January numbers fall by 5.7% year-on-year to 614,000.

Short-haul carryings dropped by 7.6% to 474,000 while Aer Lingus regional numbers were down by almost 14% to 68,000.

However, long-haul passengers using the airline’s transatlantic services rose by 22% from 59,000 in January 2014 to 72,000 last month.

The overall load factor was up by 2.4 percentage points to 68.9%, with improvements in both short-haul and long-haul.

Meanwhile, budget carrier easyJet’s passenger carryings were pegged at just over four million in January over the same month last year.

While carryings remained unchanged, load factor slid marginally by 0.3 percentage points to 85.1%.

The airline’s annual carryings for the 12 months to January increased by 6.3% to 65.3 million with an improved load factor of 90.8%.

Sourced from Travel Weekly

IAG sweetens the deal in quest for Aer Lingus

Willie Walsh

By Patrick Whyte,

International Airlines Group has made a series of “legally binding commitments” in a bid to assuage fears over its proposed takeover of Aer Lingus.

IAG’s €1.36 billion offer is dependent on support from shareholders, which include both the Irish government (25%) and Ryanair (29.8%).

The parent company of both British Airways and Iberia has said that:

  • Aer Lingus’s 23 slot pairs at Heathrow cannot be sold (including to other IAG airlines)
  • Aer Lingus will remain headquartered in the Republic of Ireland
  • There will a continuation of routes to and from Ireland for five years

Willie Walsh, IAG chief executive, said: “We are committed to maintaining and strengthening Aer Lingus. We want to develop air services that ensure Ireland’s connectivity is enhanced.

“In seeking the support of the Irish government, we propose to offer it legally binding commitments that go well beyond the protections currently available to it.

“These commitments would give the Irish government an important role that they do not have today in securing the future of Aer Lingus.”

Any agreement on a deal that includes IAG’s commitments will be subject Irish Takeover Rules and EU competition review.

Trade unions in Ireland want the government to ensure that there are guarantees over jobs.

Ryanair, Aer Lingus’s other major shareholder, is remaining tight-lipped over a potential takeover.

“Since Ryanair has received no formal approach, or offer for our shares in Aer Lingus, we will not engage in any speculation about this proposal, other than to restate our position which is that the Board of Ryanair will carefully consider any such offer, should one be received, from IAG or any other party, in due course,” the airline said.

Sourced by TTG Digital

Anger over shake-up of BA loyalty scheme

A major overhaul of British Airways’ loyalty scheme has been met with an angry response from frequent flyers.

Changes to the Avios scheme, which come into force from April 28, mean many economy-class passengers who collect points on cheaper, restricted tickets will earn considerably less.

Some will face a drop of up to 75% in the number of points earned.

Meanwhile, customers travelling in business or first class will earn considerably more.

The shake-up also means that ‘reward flight’ passengers based in Scotland and northern England flying to mainland Europe will no longer be entitled to a free domestic connecting flight.

BA is also introducing ‘seasonal pricing’, which will mean that the points needed will vary at different times of the year.

The airline said the changes were in response to customer feedback ‘by giving customers the opportunity to earn more Avios when they purchase more expensive tickets’.

“We believe those that spend the most on flexible tickets should see the greatest rewards,” it said.

But since the changes were unveiled yesterday, many business travellers have already taken to social media to say they will be taking their custom elsewhere.

One traveller has started an online petition to fight the changes, while on the Business Traveller website other frequent flyers posted the following comments:

BA defended the changes, claiming they would provide more opportunities for customers to spend Avios on reward flights.

“We’re now guaranteeing there will be nine million redemption seats a year available – more than 500,000 more than before,” it said.

“The changes will provide more reward seats across our entire network – many of which will require fewer Avios to book than today.”

Sourced by Travelmole

Unions issue warning over Aer Lingus job losses

By Phil Davies,

Aer Lingus unions warned of 1,200 job losses, equal to about 30% of the Irish flag carrier’s workforce, if British Airways owner International Airlines Group is allowed to take over the airline.

IAG is closer to launching a formal takeover after the board of Aer Lingus said that it would recommend a €1.36 billion, €2.55-per-share offer.

Accountants from IAG went into Aer Lingus yesterday to check the books before posting a formal offer.

Irish transport minister Paschal Donohoe said there were unanswered questions about the effect on Aer Lingus workers and the connectivity of air routes into and out of the country.

“The onus is very much on IAG to display how they would seek to respond to these matters,” he said, indicating that the government may lay down a number of remedies it needs to support the offer, something that could stretch the conclusion of the deal by a number of weeks.

The deal is contingent on the support of the Irish coalition government, which owns 25% of the airline.

IAG’s offer of €2.50 a share plus the promise of a 5 cent dividend will also have to win support from Ryanair, a 29% shareholder in Aer Lingus.

The BA parent has pledged to operate Aer Lingus as a separate business with its own brand, management and operations.

The carrier would continue to provide connectivity to Ireland, “while benefitting from the scale of being part of the larger IAG group”.

Sourced by Travel Weekly