International Airlines Group

[nguba]

A number of Spanish media outlets are reporting that International Airlines Group (parent of BA, Aer Lingus, Iberia and Vueling) is considering setting up a low cost long-haul operation at Barcelona airport next summer.

The operation will start with two Airbus A330 aircraft and destinations under consideration include Los Angeles, San Francisco, Buenos Aires and Santiago.

It has not yet been decided which airline in the group will operate the flights.

http://economia.elpais.com/economia/2016/12/22/actualidad/1482411442_863938.html

[whitelighter]

Vueling makes the most sense assuming it's one of their existing brands.

[toledoashley]

Looks like a Spanish response to what BA have done (or are doing at Gatwick). Cheaper cost long haul to counter Norwegian.

[BigFrank]

Given the pasting which Vueling received in the Spanish press last summer (and which I commented on a couple of times myself on the Vueling thread ) and given how little sign there is of improvement, one can but hope that Aer Lingus will "get the long-haul gig."

Otherwise, it must surely be time to sell my handful of remaining shares before they go the way of RBS

[peterhr]

It would look better locally if it was Iberia ?

[Una Due Tfc]

Aer Lingus have by far the best profit margin in the group, just shy of 30% vs BA at #2 who are in the mid teens IIRC, so giving new A330s to anyone other than EI would be madness, hence why they got 2 this year and two more next year.

EI did okay operating MAD-IAD for UA a couple of years back, crews were based in IAD, and loved it apparently.

[VickersVicount]

WW im sure specifically said VY would concentrate on short haul only.
Maybe it will be the same outfit that takes over LGW and MAN !

[Una Due Tfc]

Well EI's base in MAN was very profitable until Maggie kicked them out. LGW an utter failure on the other hand. Vueling have a deservedly poor reputation in Spain, so if it wasn't Iberia EI would be the best fit in BCN I would think. Unlikely though I reckon.

[EI-BUD]

Suggestions of EI operating ex BCN on long haul but surely not with EI brand? My sense would be that IAG week would want to start with a blank page and create a new airline with very low costs... EI having a high profit margin as suggested above is no indication that the same would be the case in BCN. DY will respond and test their resolve.

Makes a lot of sense to use Vueling, as Vueling is well known (ok some bad press lately, but that can be repaired) and at BCN Vueling have the advantage of connectivity to a large network, a feed to a long haul network would help in the battle on short haul v FR

[BigFrank]

I can't fault your logic there.

Just as you can't fault my logic in asserting that "Jeremy Corbyn might win the next UK General Election."

Though I strongly suspect that you wouldn't head for the bookies on the basis of my assertion.

Just as I certainly won't be heading for my broker to buy IAG based on yours.

[EI-BUD]

Thank you big Frank!

If we had a crystal ball... I have confidence in what IAG will do... I for one dont forsee IAG going the way of RBS as you mention. IAG has huge scale now and as it grows so too does its efficiencies.

[toledoashley]

EI-BUD, I presume Vueling still holds the rights on the 'ClickAir' branding from when they merged. That would be a sensible branding option for IAG, and one which yes it was used a while ago, would still have some recognition in the Spanish market, and is generic enough to be used pan-European.

[EI-BUD]

Toledoashley

Great idea, certainly worth considering!!!

[nguba]

It would make sense for it to branded Vueling as it will be relying on its short-haul feed at BCN. This would also be consistent with IAG's approach of having brand consistency (for the most part at least) at hubs. Hence why IAG pushed ahead with Iberia Express at MAD in spite of opposition from the unions, rather than letting Vueling take over at Madrid.

But it won't be operated by Vueling. It had a very bad summer and IAG has curtailed its growth plans for the next year whilst it gets its operation back on track.

I can see a new airline with a new AOC linked to the Vueling brand with perhaps EI or IB wet leasing aircraft in its first year.

[Jamie2k9]

Aer Lingus have by far the best profit margin in the group, just shy of 30% vs BA at #2 who are in the mid teens IIRC, so giving new A330s to anyone other than EI would be madness, hence why they got 2 this year and two more next year.

EI did okay operating MAD-IAD for UA a couple of years back, crews were based in IAD, and loved it apparently.

On paper EI look great but have yet to be challenged by low cost on T/A.

WW im sure specifically said VY would concentrate on short haul only.

They say a lot of things but cannot stick to them if conditions change which they have.

I agree it will most likely be operated and branded as Vueling but they are been a little optimistic for getting a S17 start unless it's advanced internally which I suspect it's not.

[BigFrank]

"...If we had a crystal ball... I have confidence in what IAG will do... I for one don't foresee IAG going the way of RBS as you mention. IAG has huge scale now and as it grows so too does its efficiencies...."

Point taken.

My near worthless RBS shares would not have caused me quite such grief!

And my many fewer BA/ now IAG shares...?

The question at issue here in the short term is quite how disastrous might be the Vueling brand.

I decided on a non-scientific, but I would assert, far from useless investigation of the customer confidence in Vueling over against 2 mainstream competitors viz (i) easyJet and (ii) what my Los Angeles attorney has informed me I must for the sake of avoiding litigation call "the Low Class Airline"

I studied the last 11 evaluations for each airline as of now on the www.airlinequality.com website.

The results, out of 10:

Vueling: Mean average 3.09 Median 2 Mode 1
easyJet: Mean average 6.67 Median 9 Mode 9
"tLCA": Mean average 6.73 Median 9 Mode 10

Although it was I think Samuel Goldwyn Meyer who claimed that "there is no such thing as bad publicity" with figures like those, I for one would be sweating were I in WW's elegant brogues.

[Jamie2k9]

The question at issue here in the short term is quite how disastrous might be the Vueling brand.


Simple answer is previous problems are more less irrelevant.

If the price is right then seats will be filled. I can't think of a many airlines in Europe who have not had significant bad press over the last 10 years.

If the Spanish don't fill planes them other Europeans and Americans will.

[Bidule]

I can't think of a many airlines in Europe who have not had significant bad press over the last 10 years.

Ryanair is probably the best example that very significant bad press does not have consequences on the sale of low priced seats.

[nguba]

IAG is well aware that Vueling had a very poor summer and Willie Walsh has been quite open with investors as to what the causes were. A number of steps have been taken to improve performance, including putting Vueling's growth ambitions on hold for a year.

[nguba]

Los Angeles airport is saying Vueling will launch BCN-LAX in June:

https://twitter.com/flylaxairport/status/816676026159923200

[vctenderness]

Page doesn't exist.

[nguba]

The tweet has since been deleted.

Apparently an official announcement is due next Wednesday and Aer Lingus will wet lease aircraft to Vueling.

[nguba]

IAG has issued a statement confirming its plans:

IAG Printer Friendly Version - News Release (http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-newsArticle_Print&ID=2235059)

On 22 December, IAG announced that it plans to set up a next generation longhaul operation in Barcelona from June 2017 using two A330 aircraft. Destinations being considered include Los Angeles, San Francisco, Buenos Aires, Santiago de Chile, Havana and Tokyo. Options for the new operation include setting up a new airline or consider using existing resources from IAG's airlines. No final decision has yet been made.

IAG also topped 100m passengers in 2016:

IAG Printer Friendly Version - News Release (http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-newsArticle_Print&ID=2235067)

International Airlines Group (IAG) carried more than 100 million passengers in 2016, a record for the Group.

In total, Aer Lingus, British Airways, Iberia and Vueling carried 100,675,056 passengers which was up by 14 per cent compared to 2015.

IAG's chief executive, Willie Walsh, said: "This month, IAG celebrates its sixth birthday and our airlines continue to go from strength to strength. Last year we carried more passengers than ever before with our flights 81.6 per cent full.

"In addition, Iberia was the most punctual major global airline in 2016 and its subsidiary Iberia Express was the best performing low cost carrier in the world. Huge credit should be given to the team at Iberia which, following restructuring, has become both financially and operationally stronger".

Group traffic for 2016, measured in Revenue Passenger Kilometres, was up 9.7 per cent while capacity, measured in Available Seat Kilometres, was up 9.4 per cent

[goldeneye]

Would IAG be a possible purchaser of the 49% stake in Air Malta that AZ was looking at now that deal has fallen through ?

[vctenderness]

Well if they did it would close the circle as Air Malta was started by BA predecessor.

[nguba]

I don't think IAG would be interested in acquiring a minority stake in an airline.

I would expect IAG to want full control.

[Una Due Tfc]

There was a lot of talk that TAP would be next once they sort their pension issues.

[CabinCrewe]

Could CX pulling out of BCN be significant with upcoming OneWorld lowcost pending?

[tigertanaka]

There have been rumours about Finnair before. Buying a One World carrier would be easier to integrate and they have a fabulous route network to Asia where BA is weak.

[nguba]

So nearly one month on from the first reports of a new low cost long-haul airline at BCN, still no official launch announcement.

I can see IAG being interested in Finnair as it fills an obvious network gap, provided again it can secure full control with no risk of Government interference.

[inOban]

See ch-aviation. Apparently Iberia express, not Vueling, and no mention of Aer Lingus involvement. No official announcement yet.

[PPRuNeUser0176]

Willie Walsh has confirmed Vueling will not operate new low cost flights from BCN nor would Aer Lingus brand be used....note didn't say Aer Lingus wouldn't operate.

Tickets to go on sale soon.

Barcelona hub a start for BA owner's budget long-haul flights | Reuters (http://www.reuters.com/article/iag-longhaul-idUSL5N1FT5M0)

[runway30]

A brand name that most people outside Spain cannot pronounce is not an easy way to build market share so I would not be surprised if Iberia Express is used.

[toledoashley]

Runway30 - It was also announced they have ambitions to grow outside of Spain as well - so I would expect Vueling to be the brand, operated by Aer Lingus.

[Alsacienne]

Is this in anyway related to Iberia Express?

[canberra97]

I was under the impression that a formal announcement had already been made by IAG that Iberia Express will be used for any planned long haul flights from BCN, there was a discussion regarding it on A.net although no official route announcements have been made as it's just in the planning stage for now and may not even happen but I think if anything were looking at 2018.

[PPRuNeUser0176]

Appears to be some speculation that IAG are about to announce a major aircraft order for Bombardier C Series 300 for BA and Aer Lingus (10 for EI).

Could it be BA A319 replacement?

Walsh spoke about C Series last year...

[Waldo1]

Appears to be some speculation that IAG are about to announce a major aircraft order for Bombardier C Series 300 for BA and Aer Lingus (10 for EI).

Could it be BA A319 replacement?

Walsh spoke about C Series last year...

Yes,they are binning off Eir under its present guise and doing it themselves....plus massive expansion of the regional flying programme for BA too

[EI-A330-300]

Yes,they are binning off Eir under its present guise and doing it themselves....plus massive expansion of the regional flying programme for BA too

EIR are under contract until 2022, EI also co own some of the A72-6 while it's been clear for some time a bigger capacity jet is needed.

Anyway interesting to see what happens..

[cornishsimon]

Well STK are trying to recruit E95 crew for a DUN base. We know they are opening routes under the BE brand at SEN but the DUB base would suggest some E95 action in the future for EIr

cs

[toledoashley]

BA/Cityflyer seems to have found a niche in regional flying to 'Premium Leisure' destinations and the C-Series would be a really good aircraft for the role (exc LCY). I can image EDI getting the same treatment at BRS/BHX/STN/MAN.
From what they said at the investor day, they are really trying to upgague LHR to 320's and 321's - so I don't think it will a 319 replacement.
At VY there is a gap - they have tried the 319, but so far the operations have been fairly limited.

[wiggy]

I suspect the above speculation is valid but it's worth bearing in mind the mantra now is IAG orders aircraft for IAG...not the individual airlines. It's highly unlikely but come the day the new aircraft could end up at Vueling.

[nguba]

It was a bit disappointing to see EIR pull some UK regional airport routes so soon after the IAG takeover of EI and subsequent expansion of its transatlantic network before it had even had the chance to really market the DUB hub in the UK. So if EI can increase coverage under its own metal, this would be welcome.

With the Avios frequent flyer currency and EI and VY part of IAG with IB and BA, as well QR codeshares with BA, there is a big opportunity to regain a lot of lost ground in UK regional airports after the "London Airways" retreat of ten years ago.

However, at the moment it is very sporadic and there's no clear message to UK regional airport flyers. The travelling public at large have probably never heard of IAG, let alone which airlines are part of it.

[nguba]

IAG is reported to be close to announcing an order for 7 A321neo long-range aircraft:

https://www.bloomberg.com/news/articles/2017-02-14/iag-said-to-seal-long-range-airbus-a321neo-order-for-aer-lingus

[j636]

So it looks like either EI or DY to be first carriers to fly A321 LR to the US, both expected to enter service in 2019. EI had the first A330-300 ETOPS service to the US many years ago.

Kavanagh said recently it could be a config of 188 (16J, 172Y) was been looked at.

[canberra97]

Although Aer Lingus would be the first airline to fly the Airbus A321 LR from Ireland to the USA I think TAP Air Portugal will be the first airline to fly the type to the USA albeit from Portugal.

I've not mentioned Norwegian because we don't even know their plans if there are any!

[nguba]

IAG has reported its annual results and capacity plans for 2017.

No announcements about aircraft orders and new airlines but all 4 airlines will expand in 2017 with Aer Lingus having the highest percentage growth year on year:

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzY3OTgyfENoaWxkSUQ9LTF8VHlwZ T0z&t=1&cb=636235198008619875

[nguba]

An announcement on low cost long-haul could be made this Friday according to this article (in Spanish):

IAG presenta el viernes su 'low cost' de larga distancia desde Barcelona | Empresas | Cinco Días (http://cincodias.com/cincodias/2017/03/15/empresas/1489583125_262211.html)

[nguba]

Level is the name:

https://londonairtravel.com/2017/03/17/international-airlines-group-to-launch-new-low-cost-long-haul-airline-level/

[goldeneye]

More on Level here (https://www.flightglobal.com/news/articles/iag-brands-new-long-haul-a330-budget-carrier-level-435290/)

[crewmeal]

I did a 'booking' for a return trip to LAX from BCN in August. The cheapest fare works out at $652. Cheap or not, you decide. No connections from the UK though.

[El Bunto]

'Fly Level' Well, other than the three-degree nose-up pitch of an A330 in mid-cruise. Levelish.

Is Level even a word in Spanish? Most romantic languages corrupted the Latin 'libellus' to 'nivel / nevel / niveau' and similar back in the 1200s.

[BigFrank]

Nope.
Nor in Catalan. For what that matters.

But it is in English. And that's all that matters.

Currently, that is.

[Una Due Tfc]

What a crap name

[vctenderness]

Has anyone noticed that Level is a palindrome? Maybe why it was chosen.

[El Bunto]

Useful during push-back I suppose.

[nguba]

To pick up on a point raised in another thread, I think a justified criticism of IAG is that it does not appear to have a group marketing/customer service function overseeing the whole group.

IAG's approach to UK regional airports is a case in point.

IAG has four hubs from which it can feed traffic from UK regional airports: BCN, DUB, LHR and MAD.

And yet the network planning is all over the place.

IAG was on the record that part of the rationale of buying Aer Lingus was to capture transatlantic traffic it was losing from UK regional airports to DUB. Yet far from building the airline's profile in UK regional airports and timing flights to meet its transatlantic flight bank, it has retreated suspending EMA, LPL etc.

Vueling has growing coverage, albeit it is a bit sporadic particularly in terms of frequency and Iberia has never really made any attempt to capture traffic. BACF has also been doing its own thing.

With the common Avios currency and BA codeshare there should be a basis for a much more coherent offer.

[EI-BUD]

Nguba,

How go you figure network planning is all over the place? EI is a decent addition to the portolio, significant progress has been made already...

EI will firstly get anti trust immunity on transatlantic flying before it can be more collaborative with fellow IAG partners. Equally, like in.any organisation there are competing priorities, and on a commercial basis they are prioritised.

Again same for LPL, EMA , routes operate on a commercial basis, which is the key point. If they are not performing commercially or if there are other markets that deliver better return, they get priority. LPL has been tried and tested by network carriers Aer Lingus and KLM, it doesn't work, both have axed it. MAN has that covered.

[nguba]

CrankyFlyer has an interview with Willie Walsh who is characteristically bullish about the prospects of success for Level against LH and AF-KLM.

Across the Aisle from IAG CEO Willie Walsh on Level, His New Airline | Cranky Flier (http://crankyflier.com/2017/03/27/across-the-aisle-from-iag-ceo-willie-walsh-on-level-his-new-airline/)

Across the Aisle from IAG CEO Willie Walsh on Why His Long-Haul, Low-Cost Airline Will Work While Others Won?t | Cranky Flier (http://crankyflier.com/2017/03/28/across-the-aisle-from-iag-ceo-willie-walsh-on-why-his-long-haul-low-cost-airline-will-work-while-others-wont/)

[nguba]

IAG is reported to be the last remaining bidder for Austrian airline NIKI which was due to be acquired by Lufthansa who pulled out due to competition concerns:

https://uk.reuters.com/article/uk-air-berlin-niki-iag/iag-is-remaining-bidder-for-insolvent-airline-niki-source-idUKKBN1EM18L

[Plane.Silly]

I could just about see the appeal from IAG's end

BA/Level - Long haul
Iberia/Vueling - Western Europe Short Haul
Niki - Central (and eastern?) Europe Short haul - not a major amount of overlap into an unserved region from IAG

[Habana2118]

I think we would just see Niki absorbed into Vueling, VLY is the short haul low cost airline of the group, it is strong in Spain, Italy and France but definitely would benefit from growing in Germany/Austria etc.

[davidjohnson6]

Is this perhaps a case of a new Deutsche BA ?
If you end up as the number three or number four player in a market (LCC out of D-A-CH countries) it's always a struggle to hit profitability

[SWBKCB]

https://www.flightglobal.com/news/articles/iag-to-acquire-niki-for-20-million-444527/

IAG is to acquire the assets of Austrian leisure carrier Niki for €20 million ($24 million) and provide liquidity of up to €16.5 million.

The purchase will be made by a newly formed subsidiary of IAG's Spanish low-cost carrier Vueling, says the group. The transaction is subject to regulatory approval by the European Commission.

[KelvinD]

It would seem they are getting a bargain on the aircraft. Niki have around 20 or so of the A320/321 family. They had more but some have been returned to the lessors. So, around $1M per aircraft must be a good deal for IAG.

[toledoashley]

Despite the bump in aircraft, I'm sure IAG are more interested in the slots available - especially in Zurich/Dusseldorf/Palma & Vienna. It's a cheap price for such access.

[CabinCrewe]

did it not only workout around 12 aircraft?

[LGS6753]

The aircraft are likely to be leased, so the consideration will be for slots, systems, goodwill, customers, databases, etc.