Reply To: IAG a House of Cards?

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VintageKrug
Participant

Good point, and I appreciate you don’t have a history of having an axe to grind.

There have certainly been challenges; however these are not really of Walsh’s making – at a time of increasing fuel costs, BA was hit with a series of external shocks, from the closure of airspace which disproportionately affected UK/transatlantic ops, relentless APD increases, failure of BAA to properly manage Heathrow during snow events, delays in delivery of new aircraft which pushed up fuel bills and restricted expansion plans as well as the need to acquire Iberia at a difficult time to shore up BA’s cash position, despite the disadvantages in the short term, and more recently the need to acquire bmi when there was little money in the pot to do so.

Whatever you believe was the cause, the cabin crew dispute affected profits at a very sensitive time. My position is that the Unions failed to negotiate and ended up with a worse deal for the airline and its members, while destabilising the firm for a year or so, others will disagree but I have my oft rehearsed position and know it to be correct.

When you compare with AF and Lufty, BA is in lockstep with Lufty, and slightly behind AF. However, BA always suffers in a downturn and surges during an upturn as its products are primarily business focussed, and that’s where it makes its margins:

http://uk.finance.yahoo.com/echarts?s=IAG.L#symbol=iag.l;range=1y;compare=lha.de+af.pa;indicator=;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

I do see some really positive upside in Iberia, and IAG as a whole; if the mooted Qatar tie up happens I would expect more resolve in dealing with Iberia quickly and that would give further confidence.

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