[rferguson]

The only benefit that IB has to BA is that it’s strongest market is where BA is weakest – LATAM.

I’m sure that BA would love to cut ALL their other routes and essentially have a massive LATAM route network from LHR T5 via MAD.

I think eventually Vueling will take over most/all of the short haul flying. Or maybe even the whole business in a Tyrolean/Austrian or Crossair/Swiss kind of fashion.

[transtraxman]

I think that would be an error. It is essential that BA maintains direct non-stop flights to Latin America. However, its market is much more limited than Iberia´s. Thus the two hubs(LHR and MAD) should be complementary.

Mexico, Lima,Peru (to connect to Lan´s network), Buenos Aires (also to connect to Lan), Rio and Sao Paulo ( to connect to TAM) are the minimum number of destinations to be served from LHR. I would even say that Bogota, Quito and Santiago de Chile are musts because Lan provides onward flights.
The question is if LHR still wants to be an international hub or not.

[BigDog.]

Wrt a Spanish hub transtraxman. My logic to have this in Barcelona as opposed to Madrid is :

a) Although Madrid has double the population of Barcelona, Madrid is surrounded by the lowest population density, whereas Barcelona is surrounded by other higher population density areas.

http://upload.wikimedia.org/wikipedia/commons/c/c3/Population_densities_in_Spain_(2005).png

b) There is far greater affluence in northern Spain. Northern Spain is recovering at a quicker rate and is expected to be the base of future growth in Spain. Central and southern Spain continues to deteriorate.

c) The proximity to southern France and its links with HS rail enable it to have a better catchment area than Madrid – imo.

d) Most potential Spokes would find BCN more accessible than MAD – especially with a high performing Vueling.

Thus would consider replacing MAD with BCN, especially if IB continues to be problematic.

As you have a better insight into the region, where should the hub be? Impact of any independence?

[transtraxman]

If you talk about Vueling you have to be careful,

Crossair took over Swissair´s assets and almost ended up in the dustbin itself. Swiss rose from the ashes of the combined airlines to be taken over by Lufthansa (even though BA fluffed its chance of a takeover before that).

Vueling is based at Barcelona, which should be emphasised is not an Iberia Hub. Iberia should mold itself to the successful Vueling and not the other way round. As they say “if it ain´t broke ,don´t fix it” .

Iberia Express and AirNostrum-Iberia Regional do a good job of feed into Barajas. Keep it that way.

BA could actually learn from these for its own feeds. It treats Flybe in a very offhand manner which does not do it any service. Sun-Air (BA´s franchise in Billund) does little to nothing for BA – it should be demanded to provide better feed or lose its franchise. In fact, BA could design a much better strategy with its franchisees and codeshare partners to increase its feed from them – however, that might demand too much new thinking for BA´s own capabilities.

[transtraxman]

The four richest regions in Spain are Madrid, The Balearics, Cataluña and the Basque Country – in that order if I am not mistaken.
All the communications work on a hub and spoke system, meaning that everything is focused on Madrid. It is the capital of the country so the greater movement of passengers (plane, train and bus) is to/from Madrid.

The airline hub, without doubt, is Madrid with all long haul Iberia and Air Europa (Skyteam) flights leaving from Barajas. Barcelona is secondary. Vueling is promoting Barcelona as a hub but at the moment it is limited to European flights. If it were a successful hub for long haul I do not doubt that(since Vueling is in IAG) Iberia would provide the long haul flights.

I see no change in the short-term. France is irrelevant except for the passengers from the French Basque country who wish to fly to Madrid or Barcelona from Fuenterrabia/Hondarrabia(San Sebastian´s airport) which literally straddles the frontier.

Independence is, at the moment, just political hot air. It is not on the cards at all for several years. If, down the line, independence were granted to Cataluña then Barcelona would have greater protagonism as a hub. But as a long haul base it would up against Barajas and Lisbon making the struggle an uphill one.

[transtraxman]

Some good news at last about Iberia.
As seen today in Travel Weekly.
“Iberia restructuring cuts IAG losses”

http://www.travelweekly.co.uk/Articles/2013/08/02/44876/iberia+retsructuring+cuts+iag+losses.html

[sparkyflier]

Thanks for this Transtraxman – interesting article.

Also an interesting image of an Iberia A380 in the link – actually very attractive I think. I wonder if that will ever happen. . .

[transtraxman]

Also on the Beeb
“IAG profits lifted as Iberia shows recovery signs”.

http://www.bbc.co.uk/news/business-23545401

[StandingThemUp]

Oh well, only losing £180,000 a day, now!

[Shearer]

That is a huge improvement.

[StandingThemUp]

I wouldn’t quite say that, to my worldview it’s gone from a major disaster to merely dreadful.

Improve means to make something better, not less worse.

[Hippocampus]

A very good set of results from IAG. A sharp increase in the profitability of British Airways proving, once again, that it is reaping the rewards of its restructuring, for the benefit of all of its employees. Vueling is already demonstrating its value to IAG. The losses at Iberia have bottomed out and there is still a lot of upside to come on both costs and revenues. Now that Iberia’s employees have had to take the pain, it’s encumbent on management to prove they can grow the airline and improve revenues, just as BA has done.

[StandingThemUp]

I always appreciate an optimist :-), especially a consistent one.

[BigDog.]

After 8 years at the helm for Walsh yet still…

The picture wasn’t so buoyant when combined with the first three months of the year, however: first-half losses deepened to €345 million from €253 million in the first six months of 2012, mostly due to the costs of restructuring Iberia. IAG has axed 1700 people so far to save money at the airline and Walsh said “by the end of December it’ll be 2400, with another 800 people to leave in 2014. There’s still a lot of work to do there, it is still losing money.”

[AnthonyDunn]

And to provide some context, comparisons and much-needed consistency… Also from:

http://www.bbc.co.uk/news/business-23545401

IAG’s results were welcomed by investors, with the firm’s shares the biggest riser on the FTSE 100 – closing up 7% at to 317p.

IAG’s result’s came on the same day that German airline Lufthansa reported a net loss of €204m for the first six months of the year, compared with a profit of €50m a year earlier.

Lufthansa is also in the process of trying to trim costs and is aiming to cut 3,500 jobs.

Chief financial officer Simone Menne said the restructuring of the airline was “gaining speed”.

[Author]

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