Reply To: IAG a House of Cards?

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In the interest of balance and to put IAG’s quarterly earnings into perspective, how about Lufthansa AG’s recently reported results:

That is a €359million loss, unchanged from last year – and LH is planning some additional 3,500 job cuts. The passenger airline lost €363million with cargo and other operations reporting positive results. I have a recollection that AF/KL has also reported a substantial Q1 loss. Does this mean that LH’s directors and CEO should not have taken over/taken stakes in LX/OS et al? And should not the LH CEO be flayed alive for having failed to react pre-emptively to changes in the wider €-zone by substantially reducing LH employees T&Cs before now?

Yes, IB is clearly a total basket case and it is deeply regrettable that BA may have overpaid in return for the merger. Having just witnessed Snr Management’s company report a US$3Billion loss for last year and a US$14Bn impairment (I will repeat that: an impairment/write-off of fourteen billion US dollars) arising from the acquisition of Alcan at the height of the market. Her employer’s response is to announce its intention of cutting some 45% of its headquarters staff, as part of a US$5Billion cost cutting campaign.

I am sadly only too well aware that investment bankers can massively mis-price deals and boards of directors can be comprehensively hoodwinked by their advisers. Just as long as they collect their advisory fees however…! Oh, and that pure hubris can lead CEOs into believing that they “have” to do a massive deal as justification for their own massively inflated salaries – as was recently highlighted by a BBC Radio 4 programme looking into how CEOs justify their earnings. And as I learned whilst at London Business School.

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