[SergeantMajor]

A lot of this is connected with “inducements” which can make the not insignificant costs of launching a new base more attractive to the airline.

GDP is a rather broad brush approach, BusinessBabble. Yield is key, and a smaller group of affluent individuals with business in Europe can justify a route even from a country which may not have a very good level of GDP.

[sparkyflier]

Alex McW – Both BA and Avianca flew between London and Bogota in the past (BA via Caracas), but that was when Colombia was a very unstable and violent country with a terrible and volotile economy. It has now been booming for years, is stable and much more secure. That is why the route can be re-started.

I would not advocate flights between Caracas and LHR now, as the economy there is a disaster.

BusinessBable, Santiago has been rumoured for a while, and *only* has economic growth of 7+ %! France has a daily AF 777-300 ER (300+ seats) and has no colonial links with Chile, so I refuse to believe a UK-Chile cannot provide enough demand for its own direct connection.

AF sister KLM is also now starting a flight from AMS, via EZE initially.

RFerguson Bogota is also a Oneworld hub now, with LanColombia being a member of Oneworld, so there is a network there which can supply a London route, and a network to connect with coming from London.

With the economy in Argentina having lots of inflation and instability, I wonder how demand from Buenos Aires is doing for BA. This is their longest route from LHR and so not cheap from a jetfuel persective. I wonder if EZE could become a 787 route, with the 772 being more appropriate for SCL.

SM re inducements, these have been offered to BA from Panama, basically ensuring no risk to BA, but they still do not go there, yet KLM has daily 773/772s now, and AF starting 3 x weekly 772. Neither of these have any colonial links to Panama, yet are finding it very lucrative. Panama is another booming and stable country, with no direct link to UK PLC.

[BigDog.]

Walsh and Co made a massive faux pas buying/merging with Iberia. Mistimed and grossly overvalued.

Building Vueling and buying TAP (for a song) would have been the smart play.

Bottom line, Brazil has an economy larger than the next 6 south American countries COMBINED. (inc Argentina, Chile, Peru, Venezuela, Columbia)

Plus Portugal will exit the bailout within a year (2 max) imo whereas Spain will exit it sometime after Amanda Knox chooses to go on vacation to Italy.

Keep control and ownership in the UK, TAP for the Brazilian market and build a longhaul operation from Barcelona for the Spanish speaking market would have been my wish for BA.

[SergeantMajor]

The benefits resulting from the Iberia merger are already beginning to be seen, will be massive, and it is far to early to call judgement on the long term success of that decision.

[BigDog.]

Benefits? Iberia lost IAG over a massive €1 billion in 2012 so I certainly hope so.

http://www.standard.co.uk/business/business-news/british-airways-owner-iag-takes-iberia-hit-as-spain-economy-dives-8514195.html

[SergeantMajor]

Well, I think this one has been well thrashed out already.

Summary is that it’s easy for anyone to buy a profitable entity and add very little value by keeping it so.

To buy a loss-making basket case and turn it round to profitability within a couple of years, as Willie Walsh is doing against the background of a deep recession, is where the value lies.

That is what IAG specialises in, and it has proven expertise in delivering at BA, and will succeed at IB.

http://www.theguardian.com/business/2013/nov/08/iberia-full-year-profit-international-airlines-group

There were many reasons why BA would not have fared half so well as it did without the support and growth potential which the IB merger delivered.

[CXDiamond]

“SergeantMajor – 05/02/2014 16:27 GMT

There were many reasons why BA would not have fared half so well as it did without the support and growth potential which the IB merger delivered.”

Would you be able to enhance your claim with a few facts? (I won’t hold my breath waiting).

Walsh is an industry joke for the Iberia merger buying into a bankrupt airline in a bankrupt country. All anyone can see he has done is cut which any idiot can do but there’s more to running an airline than making cuts.

[Cheeryguy]

CXDiamond.
Is one to surmise from your comment that you in fact run an airline and speak from experience? Which leads one to wonder what Etihad is doing looking at AZ? Is that not a bankrupt airline in a country with a very bleak economy?

[greyhawkgeoff]

gentleman, let us see the figures for IAG on February 28 for the year and then make judgements – I guess the forum will be lively!

[CXDiamond]

Cheeryguy, I don’t run one but I do set up a lot of finance for new acquisitions by airlines all over the world. I have met almost any CEO you care to mention at some stage and am one of the people they have to convince to lend them money.

One of the reasons that BA have not been able to renew their fleet is that no one would lend to them and a lot of that was because the CEO clearly lacked the required skills to run the company and let’s say therefore did not enjoy our confidence.

As before there’s more to running an airline than cutting. QF are a bit in the same boat – they’ve had to curtail orders of new aircraft. Same problem, same outcome.

[Cheeryguy]

I must confess I’m no fan of the man. However BA is making money and IB appear to be on a far better track than before the advent of IAG.
Time will tell I guess.

[GrahamSmith]

Please be civil to one another otherwise I will close this thread.

[Hippocampus]

What nonsense from the anti-BA agenda.

Willie Walsh is very much respected across the industry. IAG has not merely cut costs at Iberia. Iberia is being to show the rewards of IAG’s commercial expertise and will benefit from its restructuring over the coming years, just as BA – which has a fully financed fleet renewal programme in place – has done.

[LuganoPirate]

Cheeryguy, I believe Etihad has imposed some tough conditions before it will takeover AZ, including getting the banks to write off a chunk of the debt.

Then again Etihad has other motives and can only buy a maximum 49%. Much is made of the fact that Etihad with AF / KLM’s stake of 7% will lead to them controlling AZ! but the reality is 51+7 also controls, so a different kettle of fish to BA’s takeover of IB.

[rferguson]

In terms of the BA/IB merger – at the time BA could not be picky. It left finding a partner late and the rest of the more beautiful brides had been taken. LH had married Swiss (which BA once looked at). Air France had gotten together with KLM (again an airline BA had had ‘talks’ with) leaving the rest. TAP, Brussels, Malev, Alitalia, SAS, Aer Lingus and Iberia were ALL basket cases at the time.

The framework of what Iberia can offer BA makes sense. It serves a country with a large population and where it’s longhaul network is strongest, BA’s is weakest – LATAM. There is virtually no cross over of interest routes wise.

Yet, we all know what Iberia also stands for. Dreadful customer service and a company effectively run by the unions. My personal favourite workers demand was that any correspondence to the pilots from the company had to be sent by courier bike – not regular post or electronically.

I think Willie Walsh may have viewed IB as he had BA a little when he first arrived. That what was needed was someone strong to stand up to the unions, strip the company of costs and turn it around. But the IB unions were (are?) like BASSA on steroids. Not to mention that the government was constantly putting it’s two pence worth into things. Then of course the financial crisis hit Spain hard.

Would BA have been better off to just not follow the consolidation/merger trend and stay it alone? Who knows. But I guess the thinking was that if they didn’t get together with Iberia someone else will.

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