International Airlines Group

International Consolidated Airlines Group, S.A.
Spanish Sociedad Anónima
Traded as BMAD: IAG
LSE: IAG
FTSE 100 Component
Industry Aviation
Predecessor British Airways and Iberia
Founded 21 January 2011 (21 January 2011)[1]
Headquarters
  • Madrid (Registered office)
  • London (Head office)[2]
Area served
 Worldwide
Key people
Services
Revenue €22.972 billion (2017)[3]
€3,015 million (2017)[3]
€2,021 million (2017)[3]
Owner Qatar Airways (20.01%)[4]
Number of employees
 63,422 (2017)[3]
Subsidiaries
Website www.iairgroup.com

International Consolidated Airlines Group, S.A., often shortened to IAG, is an Anglo-Spanish multinational airline holding company with its registered office in Madrid, Spain and its operational headquarters in London, UK. It was formed in January 2011 after a merger agreement between British Airways and Iberia, the flag carrier airlines of the United Kingdom and Spain respectively. As British Airways was the larger company, those holding shares in British Airways at the time of the merger were given 55% of the shares in the new, merged company. British Airways and Iberia ceased to be independent companies and instead became 100% owned subsidiaries of IAG.[5][6][7][8] It is the sixth-largest airline company in the world, producing €22.972 billion revenue in 2017.[3] 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

British Airways and Iberia signed a preliminary merger agreement in November 2009.[9][10][11] 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.[12][13] The merger between British Airways and Iberia was completed on 21 January 2011, and shares in the new holding company IAG and began trading in London and Madrid on 24 January.[14][15][16]

In March 2011, IAG agreed to purchase eight Airbus A330-300 aircraft and to take options on eight more, to be used for Iberia's longhaul fleet.[17] 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.[18][19] Iberia Express began operations on 25 March 2012.[20][21]

On 4 November 2011, IAG agreed in principle to acquire British Midland International (BMI) from Lufthansa for an undisclosed sum, in a deal which would increase IAG's share of slots at Heathrow airport from 45% to 54%.[22][23] On 22 December 2011, IAG agreed a binding deal with Lufthansa to acquire BMI for £172.5 million.[24] On 30 March 2012, the purchase of BMI 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.[25]

On 8 November 2012 International Consolidated Airlines Group (IAG) made a cash tender offer to buy Vueling, the Spanish low-cost airline based in Barcelona. The offer, was €7 per ordinary share of Vueling with the total cost of acquiring the shares 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 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.[26][27] In December 2012, IAG completed the merger of the cargo operations of British Airways, BMI and Iberia into a single business unit, IAG Cargo.[28][29]

In April 2013, IAG confirmed the conversion of options to acquire 18 Boeing 787 Dreamliners into firm orders, in a deal worth around US$4.5 billion.[30][31] The aircraft are planned to replace some of the British Airways fleet of Boeing 747s between 2017 and 2021.[30] On 16 October 2013, Iberia unveiled a new livery used from the end of November 2013.[32]

At the Farnborough Airshow 2014, IAG converted the options for 20 Airbus A320neo aircraft into firm orders which are currently intended to replace 21 shorthaul British Airways aircraft.[33]

In January 2015, IAG made a bid of £1 billion for Aer Lingus. This was expected to be accepted, after the rejection of two prior bids.[34] In May 2015, the Irish government agreed to sell its stake in Aer Lingus to IAG,[35] as did the Aer Lingus board in late January 2015.[36] The takeover became irreversible on the 18 August 2015.[37]

On 1 March 2015 Stephen Kavanagh was appointed Chief Executive Officer of Aer Lingus, and executive director of the Aer Lingus Board. In October 2015 Rachel Izzard was appointed chief financial officer of Aer Lingus, and also appointed to the Aer Lingus Board of Directors (prior to joining Aer Lingus, Rachel Izzard was Chief Financial Officer at IAG Cargo).[38] In November, 2015 Alex Cruz was named Executive Chairman of British Airways. Steve Gunning was appointed chief financial officer of British Airways.[39]

In April 2016, it was announced that Qatar Airways increased its shareholding of IAG from 9.99% to close to 12%.[40] In May 2016, Qatar Airways increased its shareholding to 15.01%.[41]

In March 2017 it was announced that a new low cost longhaul airline named LEVEL was to start operating from Barcelona in June 2017.[42]

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.[43] It is planned to establish a new Austrian subsidiary of Vueling as a replacement for Niki.[43]

In April 2018, it was reported that IAG was considering a takeover of Norwegian, a low-budget competitor to the group.[44] IAG confirmed the rumour, after having taken a 4.6% stake in Norwegian.

Corporate affairs

Aer Lingus Airbus A330-200
British Airways Boeing 787-8
Iberia Airbus A340-600
Level Airbus A330-200
Vueling Airbus A320-200

Overview

IAG's operational headquarters, which controls the management of both its British and Spanish subsidiaries, are at the Waterside building in Harmondsworth, London.[45] IAG is incorporated in Spain as a Sociedad Anónima, where the company board meetings are held, and is domiciled in Spain for tax purposes.[46][47][48][49] IAG has a primary listing on the London Stock Exchange and has been a FTSE 100 constituent since 24 January 2011.[50][51] It has secondary listings on the Madrid, Barcelona, Bilbao and Valencia stock exchanges,[52][53] and has been a constituent of the IBEX 35 index since 1 April 2011.[54]

Qatar Airways is a minority shareholder, and held 20.01% of the shares on 29 July 2016.[55]

Divisions, subsidiaries and franchises

The structure of the main operating companies is:

Financial results

Financial results have been as follows:[3]

Year Ended Passengers Flown Turnover (€m) Profit/Loss Before Tax (€m) Net Profit/Loss (€m) Basic EPS (€ cents)
31 December 2011 51,687,000 16,339 527 485 31.1
31 December 2012 54,600,000 18,117 (997) (923) (51.0)
31 December 2013 67,224,000 18,675 227 147 6.6
31 December 2014 77,334,000 20,170 828 1,003 48.2
31 December 2015 88,333,000 20,350 1,801 1,516 73.5
31 December 2016 100,675,000 22,567 2,362 1,952 93.0
31 December 2017 104,829,000 22,972 2,493 2,021 95.8

By 2012, it was reported that British Airways profits had been wiped out by Iberia losses, placing the Spanish airline in a fight for its survival. IAG workers in Madrid reported they believed Iberia to be the 'junior partner' in IAG citing deep concern for the airline.[58]

By 2013, Iberia had lost a billion euros leaving IAG chief executive, Willie Walsh to defend the British Airways-Iberia merger.[59] In May of the same year, Iberia had suffered further losses and IAG's balance sheet was now in deep deficit as Iberia fought low-cost competition and a deep recession. Willie Walsh admitted that perhaps British Airways should have postponed the IAG 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".[60]

From 2014 on, the Iberia unit of IAG returned to profitability, confirming Walsh's predictions. [61]

Operations

British Airways, Iberia, Aer Lingus, Vueling and LEVEL operate under their separate brand names.[62] As of 31 December 2016, IAG had a total of 548 aircraft with 172 aircraft on order and in excess of 230 options.[63] The most popular type operated is the Airbus A320 series, with a combined fleet of 227 aircraft.[64] 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.[62][64]

Loyalty 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.[65] Avios points are the frequent flyer currency of Aer Lingus, Air Italy, British Airways, Flybe, Iberia, and LEVEL,[66] and can also be used for travel within the Oneworld alliance. 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.[57][67]

References

  1. ↑ "IAG Profile". International Airlines Group. Retrieved 1 August 2011.
  2. ↑ "IAG - International Airlines Group - About Us". Iairgroup.com. Retrieved 2018-03-09.
  3. 1 2 3 4 5 6 "Preliminary Results 2017" (PDF). International Consolidated Airlines Group. Retrieved 9 March 2018.
  4. ↑ "Significant Holdings". International Airlines Group. Retrieved 3 April 2018.
  5. ↑ "British Airways and Iberia sign merger agreement". BBC News. 2010-04-08. Retrieved 2018-03-09.
  6. ↑ Hollinger, Penny (12 January 2015). "IAG's successes at Iberia should give heart to Dublin". The Times. Retrieved 29 July 2016.
  7. ↑ "International Airlines Group formed as BA signs merger with Iberia". IBTimes. 8 April 2010. Retrieved 11 April 2010.
  8. ↑ Vamburkar, Meenal (8 April 2010). "British Airways and Iberia agree on merger". New Statesman. UK. Retrieved 11 April 2010.
  9. ↑ "British Airways, Iberia agree to £4 billion merger". Reuters. 12 November 2009. Retrieved 7 November 2011.
  10. ↑ Osborne, Alistair (13 November 2009). "BA-Iberia £4.4bn merger creates Europe's third-largest airline". London: The Telegraph. Retrieved 7 November 2011.
  11. ↑ "BA and Iberia agree merger deal". BBC News. 12 November 2009. Retrieved 7 November 2011.
  12. ↑ Plummer, Robert (8 April 2010). "BA's Iberia tie-up nears lift-off". BBC News. Retrieved 7 November 2011.
  13. ↑ Osborne, Alistair (9 April 2010). "BA and Iberia sign €5.8bn merger deal". London: The Telegraph. Retrieved 7 November 2011.
  14. ↑ "BA-Iberia Overtakes Air France by Value as IAG Debuts". Bloomberg Businessweek. 24 January 2011. Retrieved 7 November 2011.
  15. ↑ "Deals and strikes loom for IAG after BA-Iberia merger". Reuters. 24 January 2011. Retrieved 7 November 2011.
  16. ↑ "British Airways, Iberia merge effective". The Independent. 22 January 2011. Retrieved 7 November 2011.
  17. ↑ "IAG purchases Airbus planes for Iberia fleet". Bloomberg Businessweek. 7 March 2011. Retrieved 1 August 2011.
  18. ↑ Jones, Rhys (6 October 2011). "IAG sets up short-haul carrier Iberia Express". Reuters. Retrieved 4 November 2011.
  19. ↑ "Iberia to launch low-cost airline". Retrieved 8 October 2011.
  20. ↑ BBC News – Spanish new low-cost airline Iberia Express launched. Bbc.co.uk (2012-03-25). Retrieved on 2012-07-07.
  21. ↑ Iberia Express to launch on Sunday. Business Traveller (2012-03-23). Retrieved on 2012-07-07.
  22. ↑ Jones, Rhys (4 November 2011). "British Airways owner IAG to buy UK's bmi". Reuters. Retrieved 4 November 2011.
  23. ↑ "BMI sold by Lufthansa to British Airways owner IAG". BBC News. 4 November 2011. Retrieved 4 November 2011.
  24. ↑ "British Airways owner IAG buys BMI from Lufthansa". BBC News. 22 December 2011. Retrieved 22 December 2011.
  25. ↑ International Airlines Group completes bmi acquisition. Guardian (2012-04-20). Retrieved on 2012-07-07.
  26. ↑ Julien Toyer (9 April 2013). "Spain's Vueling accepts takeover bid from IAG". Reuters. Retrieved 12 April 2013.
  27. ↑ "IAG ups bid for budget airline Vueling by one third". Reuters. 22 April 2013. Retrieved 23 April 2013.
  28. ↑ "IAG Cargo launched as cargo brand for BA and Iberia". Logistics Manager. 3 December 2012. Archived from the original on 12 October 2013. Retrieved 12 October 2013.
  29. ↑ "IAG Cargo launches brand". Air Cargo News. 5 December 2012. Retrieved 12 October 2013.
  30. 1 2 "IAG and Boeing agree $4bn Dreamliner deal". The Guardian. 3 April 2013. Retrieved 12 October 2013.
  31. ↑ "IAG orders 18 Dreamliner jets from Boeing despite safety tests". The Independent. 4 April 2013. Retrieved 12 October 2013.
  32. ↑ "Iberia unveils new colour scheme". 15 October 2013. Retrieved 10 March 2014.
  33. ↑ "Airbus @ Farnborough airshow 2014". airbus.com. Archived from the original on 3 March 2016. Retrieved 15 March 2015.
  34. ↑ Wall, Robert (January 26, 2015). "British Airways Parent IAG Moves a Step Closer to Buying Aer Lingus". The Wall Street Journal. Retrieved 26 January 2015.
  35. ↑ "Ireland to sell Aer Lingus stake to IAG". BBC News. 2015-05-26. Retrieved 2015-05-27.
  36. ↑ Molloy, Antonia (2015-01-27). "Aer Lingus board backs takeover offer from BA owner IAG". The Independent. Retrieved 2015-05-27.
  37. ↑ "Aer Lingus joins IAG as shareholders approve deal". The Irish Times. 2015-08-18. Retrieved 2015-08-23.
  38. ↑ "Our directors". Aer Lingus.
  39. ↑ Musah, Razak. "IAG raises financial targets, changes management". Market Watch. Retrieved 6 November 2015.
  40. ↑ "Qatar Air Increases its Stake in British Airways Owner IAG". Bloomberg. 2016-04-27. Retrieved 29 April 2016.
  41. ↑ Ben Martin (2016-05-17). "Qatar Airways lifts stake in British Airways owner IAG". Telegraph.co.uk. Retrieved 2017-04-08.
  42. ↑ "IAG Printer Friendly Version - News Release". Iairgroup.com. 2017-03-17. Retrieved 2017-04-08.
  43. 1 2 ch-aviation.com - IAG acquires Niki in €36.5mn deal 29 December 2017
  44. ↑ Paton, Graeme (12 April 2018). "British Airways owner IAG considers takeover of Norwegian". The Times (UK). Retrieved 12 April 2018.
  45. ↑ "Contact." International Airlines Group. Retrieved on October 2, 2016. Postal address: International Airlines Group Waterside (HAA2), PO Box 365 Harmondsworth, UB7 0GB"
  46. ↑ Arnott, Sarah (9 April 2010). "BA and Iberia Sign Merger Deal, at Last". BusinessWeek. Retrieved 11 April 2010.
  47. ↑ Noakes, Gary (8 April 2010). "BA eyes Madrid expansion". Air & Business Travel News. Archived from the original on 10 September 2012. Retrieved 11 April 2010.
  48. ↑ Wardell, Jane (8 April 2010). "British Airways and Iberia sign merger deal to create one of world's biggest airline groups". Yahoo! Finance. Archived from the original on 13 April 2010. Retrieved 11 April 2010.
  49. ↑ Otero, Lara (9 April 2010). "Iberia y British firman su fusión como primer paso para nuevas uniones" (in Spanish). elpais.com. Retrieved 11 April 2010.
  50. ↑ British Airways name will disappear from FTSE if Iberia merger goes ahead | Business. The Guardian (2010-04-08). Retrieved on 2012-07-07.
  51. ↑ "BA Iberia merger gets approval from shareholders". BBC News. 29 November 2010.
  52. ↑ "IAG shares begin trading, replacing BA and Iberia". BBC News. 24 January 2011. Retrieved 24 January 2011.
  53. ↑ "British Airways stands firm over crew dispute". Reuters. 13 July 2010. Retrieved 18 August 2010.
  54. ↑ "Results of the quarterly follow up meeting of the Technical Advisory Committee of the IBEX® Indices" (PDF). Sociedad de Bolsas. 8 March 2011. Archived from the original (PDF) on 23 March 2012. Retrieved 7 May 2011.
  55. ↑ "Significant Holdings". IAG. Retrieved 17 July 2017.
  56. ↑ Newenham, Pamela (2 September 2015). "IAG formally takes control of Aer Lingus". The Irish Times. Retrieved 4 September 2015.
  57. 1 2 "About Avios". Avios. Retrieved 16 January 2017.
  58. ↑ Milmo, Dan (18 November 2012). "BA's Spanish marriage flies into financial difficulties". The Guardian. Retrieved 29 July 2016.
  59. ↑ Copham, Gwynn (28 February 2013). "IAG defends BA-Iberia merger as Spanish airline falls to near-€1bn loss". The Guardian. Retrieved 29 July 2016.
  60. ↑ Thomas, Natalie (10 May 2013). "BA should have put Iberia merger on hold, Walsh admits". The Telegraph. Retrieved 29 July 2016.
  61. ↑ Peña, Ángel (26 Feb 2016). "IBERIA: LOS BENEFICIOS DESPEGAN TRAS UNOS AÑOS TORMENTOSOS". Expansión. Retrieved 26 Sep 2018.
  62. 1 2 "British Airways and Iberia sign merger agreement". BBC News. 8 April 2010. Retrieved 8 April 2010.
  63. ↑ "IAG - International Airlines Group - Fleet / Product". www.iairgroup.com. Retrieved 2018-04-17.
  64. 1 2 "Fleet/Product". International Airlines Group. 30 June 2012. Retrieved 17 Jan 2014.
  65. ↑ Burgoyne, Patrick (2 September 2011). "AirMiles says adios, returns as Avios". Creative Review. Archived from the original on 18 March 2015.
  66. ↑ "Collect and spend Avios with Flybe". Flybe. Retrieved 16 January 2017.
  67. ↑ "Helping Avios analyse huge data sets to boost transparency and growth". PwC. Retrieved 2015-12-09.
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