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BA Losses

Old 9th Nov 2012, 07:13
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BA Losses

Some shocking figures out this morning which must have the BA board somewhat worried.

The merger with Iberia is turning into a calamatous cock up. A airline which is ringfenced by Heathrow is quite simply managing to pee all that profit away.

Passengers want direct feed not links by multiple hubs. Passengers in say NI or Scotland are expecetd to get on a shuttle to LHR then another to Madrid then another to S America ?

Why not just fly to Frankfurt or Paris ?

This has all the allmarks of the same debacle that hit Lloyds, a well run company that was sailing calmly thru choppy waters only to then take on hidden debt on HBOS accounts.

Why on earth did BA not expand Manchester which is in the same country and incidentally has capacity for another 25m pax now, which also partially solves the LHR dilemma in the short term!
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Old 9th Nov 2012, 07:28
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If you lie down with dogs you get up with fleas. Iberia is definitely a dog, and now they're taking on Vueling too, the runt of the litter!
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Old 9th Nov 2012, 08:05
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Shouldnt the thread title read IAG losses ? As the majority of the problem is at IB and not BA ?


cs
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Old 9th Nov 2012, 08:28
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Naughty Bagso

BA 3rd quarter operating profit £216 million.

IAG 3rd quarter operating profit €270 million.

Iberia 9month operating loss €262million.

BA 9 month operating profit €286million.

Clearly the IAG results are being brought down by IB hence todays announcement of restructuring in Spain.
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Old 9th Nov 2012, 09:18
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<<The merger with Iberia is turning into a calamatous cock up.>>

When did BA merge with Iberia? did I miss that news?
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Old 9th Nov 2012, 09:38
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@Pleasure FLyer

Good point, the two have a joint management company, they are not actually a merged airline.

In essence, the synergies will come from management practices and joint procurement, the two airlines still have their own headquarters, chief execs and employee contracts etc.

Which is, of course, why all the attention from an IAG perspective is currently being focussed on Iberia and not BA, which is nicely making money...
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Old 9th Nov 2012, 09:55
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Good point, the two have a joint management company, they are not actually a merged airline.

In essence, the synergies will come from management practices and joint procurement, the two airlines still have their own headquarters, chief execs and employee contracts etc.

Which is, of course, why all the attention from an IAG perspective is currently being focussed on Iberia and not BA, which is nicely making money...
So you have 3 sets of management rather than 1.......Yup that always works.
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Old 9th Nov 2012, 10:38
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Modern MBA ?

Well add in mgmt for Vueling and IBexpress BACF , all reminds me of that HUNTER strategy Swiss Air had in the early mid 90's

Can you imagine the level of actual debt and liabilities versus what has been told to IAG that exist in Spain .....
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Old 9th Nov 2012, 10:55
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@racedo

I agree, it does sound slightly ludicrous but I can only guess that over time there will be synergies in back office functions such as finance, HR, IT, maybe even engineering and that is where savings will come from. At least that is how other private companies do it!
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Old 9th Nov 2012, 11:51
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Apologies if heading was misleading , it wasnt meant to be !

I was merely trying to make the point that BA which by "any definition" is the dominant partner need not have gone down this route......

OK, agreed it is not a merger but surely a very close partenership and one which is reflecting on BA !
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Old 9th Nov 2012, 11:55
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Agree 100% with Cornishsinon - please OP or mods can we have the thread title changed to something that is factual!! Such statements are potentially damaging to BA and probably litigous!
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Old 9th Nov 2012, 11:57
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The trouble is that IAG isn't a "normal private company" since, certainly as far as Spain is concerned "national pride" is at stake.

Logically you would have a single board or directors, (IAG) with management teams running BA, IB and any other group companies. However you can be sure the Spanish will laregly want to be run by the Spanish, the British by the Irish (!!!!) and whoever else by nationals from their own respective countries.

This sort of logic doesn't seem to run through the former state owned "national carriers".

It will be intersting to see if any of the redundant staff at Iberia will be offered transfers to other group companies - eg. BA. I guess there would be a nationalist hu-ha if Spanish crews found jobs at BA!
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Old 9th Nov 2012, 12:05
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Hindsight is great, but I do remember saying "what on earth?! were they thinking of ?!"

Getting into bed with a second rate carrier with ridiculous legacy working practices, intransigent dinosaur unions, massive overheads and no prospects of carrying the staff with you when the time comes for change.

That was bound to go well.
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Old 9th Nov 2012, 12:20
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the British by the Irish (!!!!)
Great gas, perhaps the issue of who want to run who is about language barriers etc.

BA and IB came together to form IAG, WW will do a splendid job in turning Iberia around. Getting involved with IB was a strategic move, in recognition that in the home market BA have limited opportunities, as it threw in the towel on regional markets to anywhere else other than London.

Lets not forget Spain is going through an appaling financial crisis, not debating the detail of that, the stats speak for themselves enormous unemployment, limited spending power etc.

IAG will bring IB to where it needs to be, IB have been guilty of being MAD and to a lesser extent BCN centric and have never really attempted in a meaningful way to serve the regions (like BA in UK) to anywhere other than the capital. Vueling will be a vehicle to exactly that and they will turn the Spanish operation around.

I for one have great confidence in Willie Walsh, whether he happens to be Irish or not!!! :-)

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Old 9th Nov 2012, 12:22
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Getting into bed with a second rate carrier with ridiculous legacy working practices, intransigent dinosaur unions, massive overheads and no prospects of carrying the staff with you when the time comes for change.
Yes I know but still Iberia went ahead and joined them assumming that BA could change
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Old 9th Nov 2012, 12:24
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I agree, it does sound slightly ludicrous but I can only guess that over time there will be synergies in back office functions such as finance, HR, IT, maybe even engineering and that is where savings will come from. At least that is how other private companies do it!
In practice what you suggest should happen however National Govts are protective of their national carriers be it UK or Spain. Hence why I believe lots of what they want will not happen easily or without great cost.
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Old 9th Nov 2012, 12:46
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@ racedo

I tend to agree, and there are parallels with the BAe/EADS merger; made perfect business sense (defence company merging with civilian company to make EU giant) but political hurdles were always going to prove too much.

At least there are no 'national security' issues around the whole IAG set up, but like you I have no doubt that we will see the bun fight begin as soon as IAG have finished restructuring IB and turn towards 'management efficiencies'...
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Old 9th Nov 2012, 12:52
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BA which by "any definition" is the dominant
By which?
Revenue?
Destinations?
Pension fund deficit?

Selective memory time, when IAG was created, Iberia was in better shape.
Anyhoo, the purchase of Vueling and the duplication of IB Express is curious. I wonder if the scenario is to close short haul and roll it into a merged Vueling / IB Express operation on much lower costs than Iberia legacy.

Passengers want direct feed not links by multiple hubs. Passengers in say NI or Scotland are expecetd to get on a shuttle to LHR then another to Madrid then another to S America ?
Only if they feel the need to fly BA. A much better option may be to connect over FRA/CDG/AMS, whereas BA will have better one stop options to the USA.
Iberia have already tried tying GLA into the MAD hub with Air Nostrum, it lasted a few months and was axed. It's not for want of trying.

Last edited by Skipness One Echo; 9th Nov 2012 at 13:15.
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Old 9th Nov 2012, 14:12
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The merger made sense at the time.

BA had no scope for growth at LHR when bmi was in Lufthansa's hands and there were soundings that the other airline groups were looking at Iberia. If Iberia had been bought by either AFKLM or Lufthansa Oneworld would have been seriously weakened in Europe.

The two airlines have complementary networks and Iberia did bring with it a very strong balance sheet with a high cash balance and little/no debt.

Turning around Iberia is going to be tough but IAG has the cash to win the battle. It's easy to forget how many were writing off BA a few years ago as a pension fund with wings with a ground operation that made it a laughing stock at LHR and had no future other than a slow decline into irrelevance.
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Old 9th Nov 2012, 16:26
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Iberia have already tried tying GLA into the MAD hub with Air Nostrum
Twice weekly on a company contract..? not exactly a hub model operation.
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