[JohnHarper]

Looks like there’s trouble ahead –

http://www.telegraph.co.uk/business/2016/07/29/british-airways-owner-iag-reviews-investment-after-brexit-and-st/

Interesting that Vueling lost £54M last year, an increase of £49M on the previous year – all under the watchful eye of Alex Cruz. It gives you great confidence in his abilities.

So there’ll be no investment which means those who fly BA will have to endure the same old tired products for years to come as they have for years already.

ABBA.

[FDOS_UK]

John

I’ve seen this coming for a while and have made a number of posts, most of which have been knoecked back with an exhortion ot look at the numbers.

BA underinvested for a long time and the long haul fleet became geriatric; of course, this did help short term profits, because there was little, if any, cost of capital and the margins covered the costs of operating a less reliable fleet (note for BA supporters – less reliable, not less safe).

That situation was addressed a few years ago with orders for A380, 787 and A350 (plus some 777-300 to cover late deliveries), but then the cost of servicing capital increased. BA went on a big cost cutting campaign and of course the short term impact is to increase margins, thus the financial results in the past few years – which only a curmudgeon would say are unimpressive.

But there is a price to pay – the onboard products have been allowed to stagnate and the soft offer is all over the place, some small improvements, more deletions and the staff morale can be observed – it is highly variable. The Financial perspective of the balanced scorecard has been allowed to dictate too much for the customer, capability and development perspectives.

BA has also maintained good passenger numbers, due to its LHR position, as the economic cycle has been helpful for several years now.

But with Brexit looming and softening of passenger numbers, along with ever improving competition (who are also stealing large volumes of pax from the UK regions, which will impact on BA), the outlook must be uncertain. If, as some people opine, BA is now holding share by using pricing elasticity (discounting), then there is a real risk of entering a downard spiral from which recovery would be difficult (although the cmpany has achieved it in the past).

I’ve just booked a round trip from MAN to the ME for £912 on QR and I’m about to re-book the same itinerary. BA is quoting £2,500 ROTFL. I could fly EK direct for the same price and the experience is just in a different league – I did DXB-MAN on the upper deck of the A380 yesterday and it was sublime – you’d have to be nuts to fly on BA via LHR unless it was much less expensive.

[SimonS1]

Q2 results out today.

Headline figures still upwards thanks to continued cost reduction, however a couple of interesting BA nuggets in there including only 73% of flights on time (below target) and customer satisfaction also well below target levels.

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

[FDOS_UK]

[quote quote=715008]Q2 results out today.

Headline figures still upwards thanks to continued cost reduction, however a couple of interesting BA nuggets in there including only 73% of flights on time (below target) and customer satisfaction also well below target levels.

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

[/quote]

Maybe certain people on FT will now accept what you were saying about delayed flights 🙂

[Tom Otley]

Hello SimonS1 – I merged the threads…

For those wanting to see the IAG results the PDF is available from here
http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-newsArticle&ID=2189282

http://uk.reuters.com/article/uk-iag-results-idUKKCN1090IQ

Walsh said IAG had seen more subdued demand from business travellers in the run-up to the Brexit vote and that had continued since.

Surveys have shown consumer confidence has plunged since the vote, while companies are reviewing investment plans and jobs in the country.

“It’s unclear when UK corporates will regain confidence in terms of travelling and doing business,” Walsh told journalists. “It will have to happen… whether that’s later this year or early next year we’ll have to wait and see,”

[FaroFlyer]

Can someone please remind me.

Is this a Business Travel forum, where business travellers exchange ideas and tips, or a base where BA knockers vent their spleen?

[mkcol74]

If BA continue to sell flights such as Riga – Kahului for £270 return (in economy) how on earth can they hope to service their capital investment?

EDIT: Just found it for £251!

[Henryp1]

For direct flights BA suits me fine as I would find changing and waiting at intermediate airports time wasting, but I may feel different if LHR wasn’t east to travel too.

At least with BA I know before boarding what the hard product will be.

ABBA

[FDOS_UK]

[quote quote=715439]Can someone please remind me.

Is this a Business Travel forum, where business travellers exchange ideas and tips, or a base where BA knockers vent their spleen?

[/quote]

It’s a place where people exchange facts and opinions.

Sorry you don’t like the thread, but it happens to be based on IAG’s announcements of a softer market and potential reduced profits.

1 user thanked author for this post.

seasonedtraveller

[SimonS1]

[quote quote=715439]Can someone please remind me.

Is this a Business Travel forum, where business travellers exchange ideas and tips, or a base where BA knockers vent their spleen?

[/quote]

In this case it’s a forum where business travellers are discussing IAG’s latest results and considering why punctuality and customer satisfaction are both well below target.

1 user thanked author for this post.

seasonedtraveller

[SimonS1]

[quote quote=715026]

SimonS1 wrote:

Q2 results out today.

Headline figures still upwards thanks to continued cost reduction, however a couple of interesting BA nuggets in there including only 73% of flights on time (below target) and customer satisfaction also well below target levels.

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

Maybe certain people on FT will now accept what you were saying about delayed flights

[/quote]

Sadly I doubt it. Even though the stats were from IAG’s own material you will normally get one of the regulars along with something along the lines of ‘I’ve done that trip 100 times this year and always been bang on time’.

I think the results are actually OK for the state of the economic environment, but clearly the FLY debacle is really causing some pain.

[MrMichael]

My take on the results, I know your all waiting with bated breath for my opinion 🙂

Results are broadly as I expected. Brexit is uncertain times for the UK airline industry, the reduction in IAG share price in line with Easyjet. Even if Brexit is trouble ahead for the future it will be a lot harder for BA than the other 3 tailfins, so to an extent an insurance policy. Pulling back routes that are unprofitable or marginal is a sensible move by any airline, even the near perfect Emirates announced such a move in the past 24 hours. The biggest hit for IAG and particularly BA is the huge fluctuations in the currency markets, the US dollar strong compared to the Euro and Pound means fuel is more expensive, even if hedged.

I think the most interesting thing is the reduction in losses from Iberia. Certainly in my view on my regular jaunt on them service has improved to an extent I no longer dislike them. Clearly the IB staff are working hard to turn the airline around. A lesson perhaps for LH & AF staff. Without the European strikes by ATC and the precarious situation in Latin America, perhaps IB could have posted a profit.

I think once Brexit is a known entity rather than an unknown the share price will bounce back strongly. I will hold my shares for now having the confidence that WW is a whiley old fox who will work hard to continue to bring excellent shareholder value.

[icenspice]

[quote quote=715440]If BA continue to sell flights such as Riga – Kahului for £270 return (in economy) how on earth can they hope to service their capital investment?

EDIT: Just found it for £251!

[/quote]

Is that a flexible ticket?

[FDOS_UK]

[quote quote=715672]

mkcol74 wrote:

If BA continue to sell flights such as Riga – Kahului for £270 return (in economy) how on earth can they hope to service their capital investment?

EDIT: Just found it for £251!

Is that a flexible ticket?

[/quote]

Only when printed on paper and rolled up 😉

[mkcol74]

Can’t remember @icenspice as I’ve deleted the itineraries now. I would doubt it. The actual fare was something like £19.76 each way.

[Author]

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