[AnthonyDunn]

Travelling with CX really is a reminder of how much IAG’s strategy has been to lower the bar. Swire very deliberately sold a sizeable minority stake in CX to the Chinese state prior to the handover in ’97. CX Diamond and/or Ian in HK will be better informed than me on whether this would represent a blocking minority stake because I would question the willingness (or the need) of the Chinese to sell out to an outfit like IAG.

What is wrong, beyond the hubris and grand-standing tendency within the boardroom, in working to improve a business and grow it organically rather than expand only through takeovers? The latter is a very unfortunate “Anglo-American” corporate tendency.

[Bath_VIP]

I really don’t see the logic of buying an airline outside Europe. Aviation ownership rules and treaties make this a problematic issue and until this whole question is resolved at a government level, I don’t think IAG will risk that. It is an oddity of the airline industry that cross border ownership is so rare unlike other industries.

Within Europe, others have correctly pointed out that competition concerns would prevent acquisitions of the likes of LH, AF & KL. With the US now consolidated into 3 global carriers and EU into 3 global holding groups, anti-trust rules will be very stringent.

I can see further consolidation in the LCC area so a merger of Vueling with a smaller LCC could happen.

But I come back to my tip of Finnair. I think this ticks so many boxes strategically for IAG that I am sure they will be looking at them with interest. I don’t see any of the East European airlines as suitable candidates as none of them have developed an Asian route network unlike Finnair.

[MrMichael]

@ Bath_VIP – 02/09/2015 10:06 BST. I think Finnair might well fit nicely in to IAG….however I understood Finnair is successful in its almost niche like market. I still have my money on SAS….a takeover makes more economic sense if you get it cheap due to underperformance and can then turn it around. SAS fits the bill, especially given the strength of the Nordic economy’s. The problem with SAS is the Governments of Denmark, Norway and Sweden want non stop flights from their hubs to long haul destinations. With the exception of NY it just won’t work. It’s feeder services from the outlying areas are now dominated by Norwegian, and those Norwegian boys are now muscling in on the long haul too.

An IAG takeover will give more feeder traffic to the Scandic capitals…making their Long Hauls viable. Just like Dublin in the West with the take over of Aer Lingus, they can use Copenhagen in the East to do the same….increasing the destinations from Copenhagen to the East will again ease the problem of LHR capacity. If you look at the prices SAS charge, it is a ruddy miracle anyone gets on. It should not fall foul of competition authority’s barring the LHR-Copenhagen/Oslo/Stockholm sectors….but that is just a matter of freeing up more slots and using higher capacity aircraft. As for Star Alliance…..well what a coup for Oneworld…leaves a huge gap in Star Alliance Northern Europe.

[Tom Otley]

Re: Finnair

It would, but

Finnair: joining British Airways in IAG would “need an Act of Parliament”

http://buyingbusinesstravel.com/news/2322994-finnair-joining-british-airways-iag-would-%E2%80%9Cneed-act-parliament%E2%80%9D

[JohnHarper]

With Scandinavian you don’t just get a dog of a company, you get the labour laws of Denmark, Norway and Sweden any of which make France and Germany look easy going and simplistic. To manage SAS effectively you need to negotiate with all three and keep them all harmonious and fair. You also have the added attraction that two of those countries are in the EU and one is not and if anything Norway is the most complex of the lot.

LH had their chance with SAS and walked away believing the best solution was that SAS sorted out their own problems and became viable or went out of business. It’s still a basket case but slightly better than it was.

Once again, the only way to change it will be highly skilled management dealing with legacy employees who see no reason whatever to change anything either now or any time in the future. It’s not a job for Wee Willie the bully boy, he wouldn’t last five minutes with the legislation involved in those countries.

[canucklad]

So if I was in the IAG boardroom and could wave my magic wand to make things happen…..

QF……would be a target, if for no other reason than to p**h off Emirates and try and capture back lost market share down under.
Arik Air would be on my radar to increase my African coverage
Hainan Airlines in China

But if I was a betting man, and hopefully nobody from IAG reads this, my top priority and perfect fit to wrap up the North American market …….. Would be………

Look away now, all the good people at Westjet !

[FDOS_UK]

“It’s not a job for Wee Willie the bully boy, he wouldn’t last five minutes with the legislation involved in those countries.”

They’d probably think he was a troll 😉

[transtraxman]

I am afraid that Westjet, though appealing, would not be a candidate for take over by IAG.

http://www.westjet.com/guest/en/media-investors/stock-info.shtml

IAG is obviously not Canadian. According to the statutes of the company IAG would never get more than 25% of the company.

[transtraxman]

Cathay Pacific has always been a successful SWIRE company.
However, with the Chinese takeover in 1997 the Chinese government made offers to many companies “which could not be refused”.

That is why many , like HSBC, debanked to London.This is possible with movbeable assets. However, Cathay Pacific is not moveable so sold a sizeable chunk to the Chinese government, which I believe is now in the hands of Air China.

Thus any thought of the airline being taken over by western companies is pie in the sky.

[Bath_VIP]

The article about Finnair above was interesting as it didn’t explicitly rule it out, it merely pointed out the obstacle in terms of the government stake. But then again the same barrier was in place with Aer Lingus and look what happened.

[transtraxman]

Where does this leave IAG?

1-It can expand in Europe organically or by takeover with the limitation of the EU competition authorities who might consider some “consolidation” as going too far(by this read Easyjet, Ryanair, LH and AF/KLM).

2-It can use the possibilities of EU territories, colonies, or dependencies to expànd networks. The small print in the legislature is all important here.

3-It can seek exemptions from local restrictive legislature to “help” develop markets outside Europe(mainly in Asia or Africa).

4-Or it could decide to develop an investment strategy whereby operative control is in the hands of IAG even if the majoririty shareholding control is not (this is being done by Etihad but also Delta).

Possibilities exist but I think IAG will be limited to Europe still for some time.

[transtraxman]

Finnair is a prime candidate,.

[PegasusAir]

Interesting that some of the suggestions are, surely IAG have more than enough to do without buying any more carriers at this time. They still havn’t started paying a dividend yet and I suspect that IB is still not where it needs to be. Has the IB acquisition yet been value enhancing given the purchase price and subsequent losses? It is still nowhere near being robustly profitable and don’t forget that there is another carrier – Iberia Express tucked in here with separate management and fleet. Of course the IB acquisition eventually resulted in the full ownership of Vueling which appears to have been a good buy but there is still much to do here as well. Vueling I believe has only one base outside Spain, in Rome, and has nowhere near the market penetration that FR or EZY have across Europe. Add to that the juggling of new aircraft deliveries replacing the gas-guzzlers (747’s and A340’s of BA and IB) versus keeping them flying longer due to the low fuel price and using the new aircraft for increased frequencies or new routes and with the integration of EI coming up, I think all together there is much to keep IAG busy without any more acquisitions. Of course, if say Finnair came on the market they would have to seriously look at it – One World and strategic but I doubt they want to be pro-active. I think WW will want to increase shareholder value with the existing group first – well I hope he does!.

[transtraxman]

@PegasusAir – 02/09/2015 17:28 BST

All very true what you say.
However, one has to take advantage of opportunities as they come up – which do not necessarily coincide with planned actions.

[lesmclaren]

John Harper – how correct you are in every respect!! Started working in Scandinavia in the middle 90’s and moved there some years ago. For many years SAS was my favorite airline then from around 2005 they started going downhill fast and have never fully recovered. Flew with them twice this week after a long gap and was still disappointed. Old and dilapidated aircraft with badly worn and sagging seats. Positive was that the lounge refit at OSL is a great improvement and it will probably be the same at ARN when they finish it – had not been there for maybe 4 years, seemed the same coffee machine was still not working!!
And yes FDOS-UK – Wee Willie is and would be looked at as a troll!!

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