IAG posts unexpected profit, braces for strikes

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British Airways bosses are set for hefty pay increases on taking up their new roles once the merger with Iberia concludes. Photograph: Albert Gea/Reuters

International Airlines Group, the super-airline formed by the merger of British Airways and Spain’s Iberia, posted a pre-tax profit of 39m (AED194m) for the first half, compared with a loss of 419m (AED2.1bn) for the same period last year. Both airlines were affected by the eruption of an Icelandic volcano and BA cabin crew strikes last year.

European airlines can expect another tough year in 2012 due to rising fuel costs and slow demand amid the economic crisis, Willie Walsh the chairman of the merged British Airways-Iberia consortium International Airlines Group (IAG) said on Wednesday.

Willie Walsh took over the reins of British Airways in October 2005, and faced a number of major challenges, including a global downturn, increased competition (from low cost carriers in Europe and premium carriers worldwide), high oil prices and tax increases. He successfully presided over a period of extensive change for the company and saved the company from bankruptcy by reducing the number of managers, increased productivity of engineers, baggage handlers and flight crew, and saw through a dispute with some of the airline’s cabin crew.

INTERNATIONAL AIRLINES GROUP

On 24 January 2011, Willie Walsh became chief executive of International Airlines Group (IAG), the parent company of BA and Iberia. Both airlines are members of the OneWorld alliance.

International Airlines Group is a multinational airline holding company with headquarters in London. It was formed in January 2011 thanks to the merger of British Airways and Iberia, the flag carrier airlines of the United Kingdom and Spain respectively. It is the seventh-largest airline company in the world (and third-largest in Europe) measured by revenues.

IBERIA MERGER

Walsh oversaw the merger of British Airways and Iberia forming a new holding company International Airlines Group in January 2011. He also created a Joint Business Agreement with Iberia and American Airlines, meaning the three airlines now market and sell each other’s seats and share revenue on trans-Atlantic route

In March 2011 IAG announced that it had agreed to purchase eight A330-300 Airbus aircraft and to take options for eight more, to be used for Iberia’s long haul fleet. In June 2011, IAG announced they were interested in purchasing British Midland International from their owners Lufthansa.This would mean BA controlling 52% of slots at London Heathrow.

IAG has around 420 aircraft and serves around 200 destinations. IAG is projected to carry over 62million passengers per year, according to British Airways executives. Both subsidiaries, British Airways and Iberia, continue to operate under their separate brand names.

Willie Walsh risks fresh industrial action strife after Spanish unions reacted angrily to plans by his International Airlines Group to create a separate low-cost carrier.

Unions expressed surprise that IAG boss was ready for further industrial action on the back of a series of strikes by BA cabin crew since November 2009.

Last week pilots, cabin crew and ground crew unions warned they would look for ways to go on strike if Iberia Express was set up separately.

International Airlines Group says it expects to deliver significant full-year profit growth, defying gloom in the airline sector, after an uplift in business class travel boosted September traffic.

OIL WOES

Iberia and British Airways have been hit on short to medium haul routes by low cost carriers and higher fuel prices.

According to industry association IATA, airline profits will fall to $300 million in 2012 from $1.4 billion in 2011. The figure includes low-cost and Europe’s 35 traditional carriers.

From January 2012, about 4,000 airline operators will face emission limits on all flights into or out of the European Union and must submit permits for each tonne of carbon dioxide released. Airlines will receive 85 percent of their required carbon emission permits for free in 2012 – the first year the sector is included in the EU’s emissions trading scheme (ETS), but that will then fall to 82 percent from 2013-2020.

Sources: Guardian, Reuters, Wikipedia

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