BA Profit / IAG LossBack to Forum
Anonymous3 Aug 2012
More evidence that wee Wille has shackled BA to a corpse: –
BA makes a profit for the first half of the year, while IB loses €263 million.
If the merger did not happen then IB would surely be going cap in hand to the Spanish state for a bailout, which itself is broke and needs bailing out.3 Aug 2012
As if more evidence were needed ………..!
Iberia has been a dead dog for many years, a company run purely for the convenience of its staff and their friends, and the odd government official.3 Aug 2012
Just shows who really needed who the most? I wonder when WW will start shutting down the unprofitable routes, cutting IB salaries and start firing (make redundant) superfluous staff.
If he thinks cuts at BA were hard achieve, wait till he faces the Spanish, they will react with fury and for them it will be a reversal and perhaps revenge for the Spanish Armada’s defeat in 1588!3 Aug 2012
Unsurprisingly, I disagree.
If BA hadn’t snapped up Iberia – even at the premium price paid, taking hindsight into account – one of the other competitors would have done.
To have allowed the Lufthansa Group or AF/klm to get hold of IB would have signed away any hope of BA expanding in Europe. As the experience of bmi shows, had Lufty taken IB over, IB would have been in a very serious situation. Buying IB was the right deal at the right time.
The very fact that IB is/was a “dead dog” means there is enormous scope for upside improvement. We’re already seeing economies of scale and other efficiencies delivering tens of millions of bottom line savings, and I understand this is actually ahead of target.
Finally, BA/IAG has possibly the greatest experience of turning around failing, inefficient companies and making them profitable, even when shackled with enormous pension liabilities (few mention that fact that BA would be seriously profitable if it wasn’t for the fact that it pays our hundreds of millions every year to shore up its pension scheme, which now seems to be under control).
If anyone can face down the vested interests within IB, WW can. Good luck to him.3 Aug 2012
++Finally, BA/IAG has possibly the greatest experience of turning around failing, inefficient companies and making them profitable, even when shackled with enormous pension liabilities ++
Jack Welch may not agree with your analysis.3 Aug 2012
The forming of IAG has finally given O/W a major airline group competitor to Skyteam and *A in Europe. Once IB is turned around like BA was, then we shall see the benefits of the merger, profitability wise and the increased capital with which to expand.3 Aug 2012
You make some valid points VK, and in my post I also wanted to add “good luck to him” as he will need it.
However, with the current economic climate, especially in Spain, when he does start to cut, as he must, I stand by my second para.
LeTigre, VK was not bumping anything here. Bucksnet started the thread this morning and VK was responding to it, as i have now responded to him. That’s the purpose of this forum. Give him a break please!3 Aug 2012
IB are one of the biggest discraces in the sky in the so called ‘developed world’
BA buying them is one thing…. trying to brand both products as one is quite simply a joke beyond belief and will do nothing but erode BAs image.3 Aug 2012
Any time i’ve ever flown with IB, its been a shambles. Rude staff, crappy ground facilities.. i mean “Salon VIP” at their biggest hub doesn’t even have wifi!!!!. Ugly styling, uninterested crew. Even flying “club europe” , they had lost the menus, brought out the “choices” while still frozen and asked “which do you want?” they both looked like grey slabs of frozen unidentifiable animal.
NEVER again3 Aug 2012
“Once IB is turned around like BA was, then we shall see the benefits of the merger, profitability wise and the increased capital with which to expand.”
It won’t be. You have to understand that in the context of Spanish labour practice, union intransigence, the mentality of IB employees, and the financial crisis in Spain, this is an impossibility.3 Aug 2012
With LH announcing record profits in the last days they seem to have got something right in the last years.
KLM / AF have a re-structuring and a strategy of becoming leaner in the next few years with AF taking most of the 5,000 job cuts.
The employment practices and conditions of the European Airlines, has been a drag on many in recent years and now out of their time. they simply cannot compete with the Middle and Far eastern Airlines, and others in Eastern Europe have had drastic cut backs, or gone (eg Czech / Malev).
The huge surge of Emirates into every European city in recent 18 months, and tie ups with slower consolidation with other Airlines of Etihad is a sure indication of where the Airlines are going. leaner less fuel guzzling fleets are a key, and therefore not just re-structuring but fleet renewals vital.
KLM for eg have this well underway with all aircraft being replaced in the last 5 years, with only some 747’s and MD11’s still running. Most of the European fleet are new 737 7/8/900’s, and Embraers. 772/3’s are here and A332/3’s all working well. They have also married up with many Chinese carriers, and expand Africa and South American markets recently.
The whole mindset of running an Airline needs to be re-thought out for operating from European bases.
Virgin seems out in the cold here also, no tie up for Alliance, and a poor unimpressive and unpopular choices for revamping things in the last few months, and much loyalty lost.
Iberia has never appealed to me for service, aircraft, practices or standards, and is simply an old generation Airline that has had its time. Clearly the old BA has a weight around its neck, re-structure or not.
We shall see the decline of many other European Airlines yet, and the main 3 groups LH, AF/KLM, BA/IB, fighting for business with the rapidly advancing strategies of Emirates, Etihad and Qatar. They have assets, cash flow, low operating costs, new aircraft, cost effective staff & bases, access to cheaper fuel, and new aircraft.
On Board these days, we would all choose innovation, smart functional cabins, new aircraft, sleak service, the best seats and food experiences, something more individual, and some reward for our loyalty in the FFP’s.
Business in Europe has a lot more decline to come, and the Euro and less spending on travel is inevitable.
Those Airlines that guard or innovate in the above will be the winners. I do not believe there is new business or are new passengers to grab any more, just a fight for the ones that exist.
That includes the business market, but also the leisure or frequent personal customer flying often, those that pay their own fares and choose who with.
These days there are such reduced business cabins in Europe, you can see business no longer chooses business class / short haul in Europe, very seldom. KLM rarely have more than 2 rows of seats (8) on a 737-900, with a good 95% of seats in economy. The income is no longer from business travel in Europe as it once was.
A total re-think, and change in mindset is needed by all major groups in Europe, as well as individual Airlines, to survive and the others do not take their business. This includes having European short haul partners, as well as medium and long haul, and a mix of Airlines in a group.3 Aug 2012
I’d actually suggest the financial crisis in Spain provides a once in a generation opportunity to address some of the structural problems which have afflicted IB.
It will take five years for the initial turnaround to be visible. It’s no small task, certainly. But I believe it’s achievable, not out of blind faith, but because IAG has put a plan in place to achieve that.
Results in terms of back office and procurement are already visible. The people side is beginning to be addressed; there will be no cow-towing to intransigent unions.
There will be casualties along the way, just as has been the case at BA itself. But what will emerge from IB’s current state will be good for all concerned.3 Aug 2012