[FDOS_UK]

flies to serve
to
get revenue
to
get a margin
to
make a profit
to
pay gratuitous executive compensation.

[AnthonyDunn]

@ Jackanory – 29/04/2016 15:53 BST

+1 Yes, can vouch for that. I am aware of at least one solid FTSE100 company well known to me, which was previously a reliable BA customer, has now gone “whoever is cheapest on that route…”. The result is that the number of ex-LHR BA CW bookings from this large multi-national will have plummeted.

[BigDog.]

AnthonyDunn – 29/04/2016 19:57 BST

@ Jackanory – 29/04/2016 15:53 BST

I agree, though as LHR is so heavily competition constrained those carriers providing better VFM have limited scope to take much market share from BA out of LHR.

[SimonS1]

@ChristopheL – all public companies exist first and foremost to maximise shareholder value. BA seem to be making a good job of it, although the share price was down about 5% today so analysts must have some concerns about sustainability.

As far as ‘To Fly To Serve’ is concerned, they must be doing something right for passenger numbers to continue growing.

[AllOverTheGaff]

SimonS1 – 29/04/2016 21:52 BST
As far as ‘To Fly To Serve’ is concerned, they must be doing something right for passenger numbers to continue growing.

Always makes me laugh that one.

If you apply the same logic, O’Leary’s outfit must be doing everything right and then some with ice-cream and cherry on top to get the increased passenger numbers and market share year on year that he does.

:-/
Rgds
AOTG.

[BigDog.]

SimonS1 – 29/04/2016 21:52 BST

As far as ‘To Fly To Serve’ is concerned, they must be doing something right for passenger numbers to continue growing.

Methinks the passenger number growth is merely due to adding the newly acquired Aer Lingus numbers and not growing BA or indeed IB. BA no longer reports quarterly though hopefully its annual report will provide an understanding of its passenger growth (or not).

http://www.iagshares.com/phoenix.zhtml?c=240949&p=irol-reportsother

BA’s 2015 Annual report noted …
Revenue for the year was £11,333 million, down 3.3 per cent over the previous year. This included a decrease in passenger revenue of £288 million, or 2.8 per cent, driven by increased competition on key North Atlantic routes and a drop in corporate customers on key oil routes as a result of the continued fall in oil prices…

http://www.iagshares.com/phoenix.zhtml?c=240949&p=irol-reportsannual

No doubt Walsh and co will justify generous bonuses resulting from an increase in profits – significantly due to a decrease in fuel costs. If/when fuel cost increase no doubt they will still award themselves generous bonuses saying they cannot control fuel costs. A win win for Walsh.

[SimonS1]

@AOTG – yes Ryanair are doing something right – bringing cheap fares to many people for whom air travel was a luxury or out of reach 25 years ago.

Remember the vast majority of passengers are only interested in getting from A to B as cheaply as possible, and Ryanair usually ticks the boxes. Of course these days they are starting to attract business travellers as well, so they are doing that right too.

All good news for shareholders.

[AnthonyDunn]

@ BigDog. – 29/04/2016 22:12 BST

It’s not just the oil routes, there used to be a lot of “mining routes” (I can think of routes, connecting off BA LH services, into ULN, PER and parts of southern America and Guinea) that are now very thin indeed. And even more so now that, with the end of the commodities super-cycle, certain mining companies have limited their (non-operational) corporate travel to the board and most senior management grades.

[AndrewinHK]

Low cost and middle of the road carriers make the most profit that’s just how it works. The top 20 most profitable carriers in the world are low costs with a smattering of full service carriers and predominantly they are UK/Ireland or US based. Emirates, CX they are both pulling back on there offering. Ethiad, Qatar etc will surely follow, the oil prices are forcing them to invest outside of there region, Qatar increasing its IAG stake to 12% and saying it is the best airline group in the world, giving Qatar 3 dividend payments so far, keeping your shareholders happy if not always your passengers IAG. Ethiad’s joint ventures, to me it’s strategy is interesting but I think the complexities of so many different branded carriers and having minority’s stakes ultimately will prove difficult for them, and Ethiads profit was fairly lacklustre for an airline of its scale.

[Flightlevel]

Improvement is probably based on cheaper fuel cost & hedging at lower prices, though fortress LHR helps too, & remember the busiest market, the Atlantic, is shared with partners who are all improving their service to compete with ME3 and can use appropriate aircraft on thin routes like Scotland to the USA, that IAG does not own.

[rferguson]

Interesting article on thisismoney.co.uk

The article states ‘In South America, where the Brazilian economy has taken a battering routes to Sao Paulo, and Rio would be cut after the Olympics in August’. I’d assume it means a cut in frequency and/or capacity than cut as in discontinued. Perhaps we are likely to see 787’s deployed on those routes.

The article also says capacity to Angola, Ghana and Nigeria will be cut due to a slow down in the oil/gas market.

Goes on to say will not renew leases on some shorthaul aircraft.

http://www.thisismoney.co.uk/money/markets/article-3566228/How-BA-grounded-high-fliers-Airline-shares-fall-5-business-trip-cutbacks.html

[SimonS1]

The call with analysts last week suggested these (Luanda, Lagos, Accra) were Iberia cuts not BA.

[canucklad]

I do recall reading somewhere that AA generate more profit for BA than BA actually does for themselves, such is the cleverness of their agreement.

Anyway, good for the morale of the Spanish who’ve had an economic rough ride in recent times.

[WillieWelsh]

canucklad – 01/05/2016 09:46 BST

The same was true of the JSA with Qantas which we were all assured was rock solid. Then of course Qantas got a better offer and took it.

The same will happen elsewhere.

[Author]

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