factsonly
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IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 3:43 pm

SPEECH BY WILLIE WALSH, CHIEF EXECUTIVE, INTERNATIONAL AIRLINES GROUP
at the Annual General Meeting, Thursday June 20, 2013

Walsh stated about IBERIA:

'The airline has become unprofitable in all its markets - including longhaul - and its high cost base means it is unable to compete effectively with other airlines, both European and Latin American.'

'I cannot stress strongly enough that the situation is critical and none of us want to see Iberia disappear.'

Will IBERIA survive or follow SR, SN, MA,..........OA and possibly others?

http://www.iairgroup.com/phoenix.zhtml?c=240949&p=media

[Edited 2013-06-20 08:44:58]

[Edited 2013-06-20 08:47:57]
 
comorin
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 3:52 pm

So why did IAG/BA buy Iberia? What changed?
 
Bongodog1964
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 4:08 pm

Quoting comorin (Reply 1):
So why did IAG/BA buy Iberia? What changed?

The Spanish economy has bombed, their growth has proved to be unsustainable. I recall figures of 2 million unoccupied homes, unemployment of around 25% etc.
One major factor is the general lack of credit, lots of Northern Europeans bought properties in Spain, some as holiday homes, some as investments and some as retirement homes. Many of these were financed by remortgaging the buyers family home, never a good idea.
Now that investment income returns have dwindled, and finance become hard to obtain, people don't have money to invest in Spanish property, plus the values have plummeted leaving owners with huge debts.
Another factor is that Northern Europe is no longer prepared to see vats sums of development aid heading South.

Much of this was beginning to emerge whilst the merger negotiations were taking place, I think BA management thought that if things turned for the worse IB staff would accept cuts with a degree of realism, rather as BA staff with the exception of BASSA members had.
 
GCT64
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 4:26 pm

I wonder what Plan B is? I don't think IAG is going to walk away from Spain (not least because they have VY as well as IB).

Possibilities:
VY to deliver all short-haul? IB short-haul totally disappears?
IB gets "Tyroleaned" (if that is a word!) and absorbed/taken over/replaced by VY?
IB long-haul shuts down and BA starts operating from MAD?

I imagine the management/owners of Air Nostrum are getting pretty worried too.
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Clydenairways
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 4:40 pm

Quoting GCT64 (Reply 3):
Possibilities:
VY to deliver all short-haul? IB short-haul totally disappears?
IB gets "Tyroleaned" (if that is a word!) and absorbed/taken over/replaced by VY?
IB long-haul shuts down and BA starts operating from MAD?

They all sound viable options to me but the last one would only work for markets with an open skies arrangement.

Quoting GCT64 (Reply 3):
I wonder what Plan B is? I don't think IAG is going to walk away from Spain

Don't think so either. They are there for long term strategic reasons.
 
BoeingVista
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 4:45 pm

Quoting comorin (Reply 1):
So why did IAG/BA buy Iberia? What changed?

They bought it several years too late, the deal made more sense when it was first talked about but they couldn't get it done on the first pass. It was rotting by the time BA came to an agreement with IB but BA still needed a consolidation partner.
BV
 
GCT64
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 4:46 pm

Quoting clydenairways (Reply 4):
the last one would only work for markets with an open skies arrangement.

BA could create a Spanish subsidiary called British South American Airways (BSAA) to operate the flights from MAD to South America and get round any bilateral issues. (Wonder where I got that name from?   )
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SonomaFlyer
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 4:52 pm

BA's options will narrow significantly if they can't get their costs base in order and fast. It may be a matter of semantics but 27% unemployment in Spain is approaching depression era levels. The overall economic picture in Spain has gutted IBs main market and so far, IAG hasn't been able to adjust IB to fit the economic picture in Spain.

If the cost situation isn't resolved soon, I think all options must be considered by IAG to protect the parent company. This would have to include a break-up/liquidation and other options that would have been unthinkable when IAG first decided to acquire IB.
 
skipness1E
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 5:49 pm

Quoting GCT64 (Reply 6):

BA could create a Spanish subsidiary called British South American Airways (BSAA) to operate the flights from MAD to South America and get round any bilateral issues.

* adopts Armstrong and Millar voice "I say old chap what a toppo spiffing idea"

Showing your age?  
I think the Vueling / Iberia Express options are Plan B. Iberia may be about to do an Austrian / Tyrolean.
 
factsonly
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 6:08 pm

Just to put the message more in perspective. The figures for Madrid Airport's performance in 2013 are dramatic:

- Jan. 2013 = 2.909.725 pax (-13.0%)
- Febr. 2013 = 2.636.544 pax (-16.2%)
- March 2013 = 3.173.020 pax (-14.0%)
- April 2013 = 3.248.353 pax. (-16.1%)
- May 2013 = 3.405.450 pax. (-14.1%)

Yes, domestic MAD operations are particularly hit due to fast trains and the departure of Ryanair & easyJet.

But IB contributes to this fall as well.
 
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seahawk
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 6:20 pm

Well, the question is what the future should be. Using Iberia Express to feed the long haul flights is not going to work, as the service is too bad, even comapred to the new Germanwings. Then they operate to Germany, but even have a German website and their english one is bad. try finding out if they have food or drink on the plane...
 
FI642
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 6:29 pm

Should BA not be able to stop the red ink, it's going to drag them down too.
How drastic the measures will be or should be is yet to be seen. IAG may
have swallowed a poison pill with this.

What is the fix? Don't know. Down size IB? Slash IB routes that are loss
making? It's got to be serious, and it's got to be soon.
737MAX, Cool Planes for the Worlds Coolest Airline.
 
bluesky73
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 6:42 pm

Slim down long haul to A330 and Maybe look to replace and reduce A343/346 fleet and routes. I know they starting to do this but maybe this process needs speeding up.

Having Iberia mainline shorthaul, express and Vueling is too much.
Keep the most profitable shorthaul routes in Iberia name and or let Vueling grow and take over. Let express die.

Iberia is still a good brand and Vueling not a great name really, as discussed in past here. The Tyrolean option is a good idea.

I just hope whatever they do keeps some of IB brand but sounds like IB is on life support and big decisions need to be made.

It will be sad day for European aviation if the IB brand totally disappears.
 
r2rho
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 7:20 pm

Oh come on, what is this talk for now? They already reached an agreement with the unions in march, routes are being axed, A333's coming in, people being fired, etc. The bases for a turnaround are being set, but you can't expect it to happen in 2 months. A lot of the effects won't kick in until late this year or next. Why this catastrophism instead of trying to build confidence in the recovery? Does he want to ruin everything? Is he trying to provoke another round of strikes?

Quoting factsonly (Thread starter):
none of us want to see Iberia disappear.'

Walsh couldn't care less about IB as an airline, but he does care a lot about their AOC, their bilaterals, and MAD T4.

Quoting Bongodog1964 (Reply 2):
I think BA management thought that if things turned for the worse IB staff would accept cuts with a degree of realism

They already did in march. 3000+ people being fired, and those who remain are taking pay cuts and will work more hours for less money.

Quoting GCT64 (Reply 3):
VY to deliver all short-haul? IB short-haul totally disappears?
IB gets "Tyroleaned" (if that is a word!) and absorbed/taken over/replaced by VY?
IB long-haul shuts down and BA starts operating from MAD?

IB shorthaul ex-MAD was meant to be completely taken over by Express, but that is currently held up at a court. IB has already handed all non-MAD flying to VY some time ago. BA could not operate LatAm from MAD because it has to be a Spanish-based airline for the bilaterals to work. But having IB tyroleaned by VY could work.

Quoting FI642 (Reply 11):
Down size IB? Slash IB routes that are loss
making?

Already happening, see MVD, HAV, SDQ, TXL, AMS, etc etc. And some A343's have been retired without any direct replacement.

So once again, what more does he want? He should show patience for the changes to take effect, and build confidence rather than destroy it.
 
mfc
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RE: IAG AGM: Walsh Calls IB Situation Critical

Thu Jun 20, 2013 8:27 pm

Quoting r2rho (Reply 13):

I agree with you, but you forget about the pilots, they didn't sign the new working conditions that every other labour groups did. They are currently trying to reach an agreement and pilots are threatening with new strikes in Summer (something that would be very bad for both Iberia and pilots because the media and public opinion won't support or understand the strike). I think that this announcement made by Walsh is just for warning the pilots that if they don't reach an agreement they will close Iberia down.

Apart from that, I find normal that now even long haul is unprofitable, as with the European network reduced drastically they are not able to feed long haul. I think that downsizing the network that much hasn't helped either.
So, we beat on, boats against the current, borne back ceaselessly into the past
 
JAAlbert
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 12:12 am

It's really difficult to analyze IB's situation without more detail. All Walsh states is that IB has a "high cost base." That could be just about anything. It seems odd that IAG hasn't been able to reduce costs - which may hint at labor costs that are complicated by union issues.

Interesting, though very unfortunate, situation. I hope, for the employees' sake, IAG can turn the company around.
 
BA0197
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 5:06 am

Obviously IAG keeps operate funds to operate their owned airlines, correct? So if IB were to go down the drain, this would have no effect on BA one would imagine?

Do BA have an exit clause? With all the anti-BA MAD demonstrations and the fact that BA is making a profit, I'm surprised that the BA side of IAG is not looking into an exit strategy, because in the end it will effect BA operations and profits.

I like the idea of "BA Latin" operating out of MAD.  
 
r2rho
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 7:50 am

Quoting mfc (Reply 14):
I think that this announcement made by Walsh is just for warning the pilots that if they don't reach an agreement they will close Iberia down.

I see, I wasn't aware that the pilots hadn't signed yet, which explains a lot, it's clearly about Walsh putting pressure on them.

Quoting mfc (Reply 14):
with the European network reduced drastically they are not able to feed long haul. I think that downsizing the network that much hasn't helped either.

I agree that the downsizing is counterproductive. IB was not an oversized airline in terms of fleet & routes, just simply too high cost. And there is a minimum critical mass needed for a long-haul airline to work. IB risks falling below that critical mass if further cuts occur.
 
LHRFlyer
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 8:00 am

Quoting BA0197 (Reply 16):
Obviously IAG keeps operate funds to operate their owned airlines, correct? So if IB were to go down the drain, this would have no effect on BA one would imagine?

Do BA have an exit clause? With all the anti-BA MAD demonstrations and the fact that BA is making a profit, I'm surprised that the BA side of IAG is not looking into an exit strategy, because in the end it will effect BA operations and profits.

Each member airline of IAG operates with its own funds and resources so, in theory, Iberia's problems have no effect on BA as far as funding and profits are concerned.

BA is now only a subsidiary of IAG and there is no basis for BA to exercise any exit clauses.

Although the pilots have not reached an agreement with Iberia, IAG say they have had legal advice (as well as conflicting advice) that it doesn't matter as far as the arbitration process was concerned.

As far as Iberia's financial and traffic performance, there should at least be signs over the next few months that things are bottoming out.
 
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SKAirbus
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 8:12 am

It sounds extreme but IAG should liquify Iberia and restart it with a lower costbase and a leaner fleet, concentrating on profitable long haul routes to South America, with Vueling taking over ALL short haul routes out of MAD and BCN.

One big problem at Iberia is the militant unions, who can't see that in order for their jobs to survive they need to make sacrifices, no matter how painful. SAS found itself in that situation a few months ago and it took near collapse to make unions realise they had no choice.

Another issue the airline has is its inferior service and products on all its routes. Passengers notice the lack of PTVs in economy. I would defnitely choose the competition if I knew I had to spend a 12 hour flight staring into space.

I can understand why WW is running out of patience with IB...
Next Flights: LHR-OSL (738), OSL-CPH (320), CPH-LHR (321), LHR-HEL (359), HEL-LHR (359)
 
PHX787
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 8:17 am

IB needs to cut all non-essential long hauls, replace some service with BA metal, or shed all long hauls completely. Also the short haul service can't compete with vueling.......so unless they change some of their practices, they're gonna go bust. IAG will spin them off and into chapter 7 faster than you can say "tapas."
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mfc
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 8:42 am

Quoting SKAirbus (Reply 19):

A330s arrive with new interiors and A346s are under refurbishment, which include state-of-the-art equipment for both classes. They is also a program to improve service, the T4-hub efficiency, punctuality, etc.

Quoting PHX787 (Reply 20):

They have already done that. All routes that has not been suspended is because they are profitable or because they have a reasonable margin to become profitable soon. BA can't operate many of the Iberia's routes because bilateral agreements between countries require a national carrier to operate the routes. Shedding long haul completely will mean the end of Iberia because it is the most lucrative and the most promising sector, Iberia is not Olympic or Malev. Vueling or Iberia Express have limited operations from MAD because Pilot's Union don't let them to expand at MAD. MGMT is trying to change that and negotiations are taking place. If they don't reach an agreement it is obvious that things will turn worse... Iberia needs a vast and profitable short-medium haul network to operate long haul successfully.
So, we beat on, boats against the current, borne back ceaselessly into the past
 
1400mph
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 8:49 am

If only BA had acquired BD or more importantly its slots sooner many they would have had more faith in not following AF, LH etc into European mergers.

If I were running BA I would have questioned the positives of the merger.

Mind you that said people blame BA for not grabbing KL when they had the chance but considering AF's problems maybe KL should not have been so fussy about terms. Who regrets it more I wonder ?
 
Clydenairways
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 9:16 am

Quoting 1400mph (Reply 22):
If I were running BA I would have questioned the positives of the merger.

As was previously mentioned by a number of posters, the purpose of the merger was to get control of the strategic asset which is a MAD hub for the future. This is what they really want rather than IB itself. Investing in IB was just a means to get dominant control of MAD airport.

MAD has had a lot of investment over recent years and is one of few European hubs that has the capacity for large growth potential. All it needs is either IB to be sorted out, or replaced by another IAG controlled airline with the right cost base, product, and customer service, to deliver on MAD's potential.
 
1400mph
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 9:40 am

Quoting clydenairways (Reply 23):
All it needs is either IB to be sorted out, or replaced by another IAG controlled airline with the right cost base, product, and customer service, to deliver on MAD's potential.

Which will be rejected whole heartedly by the Spanish people. That concept does not work. It has been proven not to.

There is no way a non-Spanish management can liquidate or replace the Spanish national carrier. All hell would break out first no matter what state the airline maybe in.

As mush as I want to see IAG prosper it is down to the Spanish to sort out Spanish aviation and rightly so. The main beneficiary of any future reward to be gained by Spanish based airlines or Spanish airports should be Spain and its economy.
 
mfc
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 9:52 am

If Iberia was closed down, Air Europa would probably take most IB's traffic rights. They have begun to fly to MVD and have increased frequencies to HAV or SDQ as Iberia has dropped the routes. Air Europa has also requested to move to T4 many times. T4 is not owned by Iberia or IAG, it's government property, so UX could substitute IB at MAD before any IAG airline, which won't do well for IAG nor BA.
So, we beat on, boats against the current, borne back ceaselessly into the past
 
Clydenairways
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 9:59 am

Quoting 1400mph (Reply 24):
Which will be rejected whole heartedly by the Spanish people. That concept does not work. It has been proven not to.

There is no way a non-Spanish management can liquidate or replace the Spanish national carrier. All hell would break out first no matter what state the airline maybe in.

As mush as I want to see IAG prosper it is down to the Spanish to sort out Spanish aviation and rightly so. The main beneficiary of any future reward to be gained by Spanish based airlines or Spanish airports should be Spain and its economy.

But it's already started to happen, both Vueling and IB Express are both Spanish, have very low cost bases and are owned by IAG.
IB mainline have hardly any short haul left flown by themselves, it's mostly all done by IBX and Vueling now.
If IB mainline fails to restructure, IAG will just use one of these AOC's to take over long haul ops too.
 
Burkhard
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 10:03 am

An easy way to save many million pound would be to fire the BA management that was responsible for the IB takeover.. I'm sure many families of hard working stuff will loose their income before this happens.
 
1400mph
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 10:10 am

Quoting clydenairways (Reply 26):
But it's already started to happen, both Vueling and IB Express are both Spanish, have very low cost bases and are owned by IAG.
IB mainline have hardly any short haul left flown by themselves, it's mostly all done by IBX and Vueling now.
If IB mainline fails to restructure, IAG will just use one of these AOC's to take over long haul ops too.

Yes I suppose so. What a mess though !

Quoting Burkhard (Reply 27):
An easy way to save many million pound would be to fire the BA management that was responsible for the IB takeover

BA is profitable against all odds thanks to said management. Keeping secure the income of many hard working staff.
 
anstar
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 10:28 am

Quoting 1400mph (Reply 22):
Who regrets it more I wonder ?

I'd say BA.


If BA had taken KL over I doubt KL would have been allowed to grow as much as it has. Whilst AF is not a greta dance partner they haven't been as bossy as I would have thought BA would have been... which also lead to BA losing SWISS.
 
Clydenairways
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 10:34 am

Quoting mfc (Reply 25):
If Iberia was closed down, Air Europa would probably take most IB's traffic rights.

I don't think anybody expects IAG to close down IB and replace it with nothing, it could be something similar to what happened with Austrian.
Negotiations on restructuring at Austrian failed, so the Austrian mainline AOC was replaced by the lower cost base Tyrolean AOC under the existing Austrian brand.

So in Iberia's scenario, if restructuring with mainline fails. IAG use either the IBX or Vueling AOC to take over the entire IB network under the Iberia brand name.
 
charliecossie
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 10:48 am

Quoting SKAirbus (Reply 19):
IAG should liquify Iberia

An absolute classic. You just made my day much happier. Thanks.  
 
Clydenairways
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 10:51 am

Quoting anstar (Reply 29):

I'd say BA.


If BA had taken KL over I doubt KL would have been allowed to grow as much as it has.

I think you are right. BA would have loved to get control of the AMS hub. But what you would probably seen is that KLM would have been re-directed away from competing directly with BA.
BA would have had to find a way to run both hubs, without them competing too much with each other.
 
1400mph
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 12:18 pm

Quoting anstar (Reply 29):
I'd say BA.
Quoting clydenairways (Reply 32):
I think you are right.

I would imagine they both regret it.

In my view KL would have survived as an independent carriers and still been the profitable entity that it is today without the problems of AF.

Swissair only went bust because it overstretched itself not because it is financially unsupportable for Switzerland to have an independent de facto national carrier. In fact far from it

BA managed to secure future growth with the acquisition of BD slots and LH is financially very secure independently.

IB in my view are probably best off sorting out their problems for themselves and AF are just weathering a storm others have weathered and emerged solvent and profitable.

Maybe joint business ventures and alliance co-operation should have been the ceiling.

Everything as it stands is just too rigid. Times change.

The United States is a totally different kettle of fish btw.

[Edited 2013-06-21 05:25:21]
 
PHX787
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 2:33 pm

Quoting mfc (Reply 21):
Iberia is not Olympic or Malev. Vueling or Iberia Express have limited operations from MAD because Pilot's Union don't let them to expand at MAD.
Quoting mfc (Reply 21):
Iberia needs a vast and profitable short-medium haul network to operate long haul successfully.

Here's the primary problem. Unions are putting themselves before their own jobs.....seriously. if IB goes under because of their inability to change their line of business.........well, that's their own fault then, the Unions.
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factsonly
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 2:47 pm

Quoting clydenairways (Reply 32):
I think you are right. BA would have loved to get control of the AMS hub. But what you would probably seen is that KLM would have been re-directed away from competing directly with BA.
BA would have had to find a way to run both hubs, without them competing too much with each other.

There are three major reasons why BA/KL did not materialise;

1. To much overlap between the two airlines, their network strengths are very similar - i.e. not complimentary (AF-KL networks are more complimentary to one-another).

2. Proximity between the two hubs, leading to overlap and competition. (though CDG AMS is not much different)

3. The BA leadership demanded too much control over the joint venture, no acceptable balance between the partners. (AF was more sensitive to Dutch pride.)

The positive sides were:

- Cultural match
- Business match
- Financial strength
 
babybus
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 3:08 pm

I'm not sure talking down a partner, Iberia, is the best or most professional approach. Once people start to lose confidence in a product it is almost impossible to get that confidence back.

BA and Iberia as airlines are as different as chalk and cheese. It was a partnership that could never really been seen as credible or long term. It was a BA gamble.

On a personal note I would never travel with Iberia again. Their horrible, rude, brusque cabin staff and ground crew just ruin any flight. It also now operates as a sad LCC at scheduled airline prices.

I don't want it to disappear but I do wish it could look at itself and change. BA really do need to dump it.
and with that..cabin crew, seats for landing please.
 
PHX787
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 3:31 pm

Article from a while back about the IB issues and the future of MAD

http://www.02b.com/en/notices/2013/0...will_suffer_a_slow_demise_4000.php
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FlyCaledonian
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RE: IAG AGM: Walsh Calls IB Situation Critical

Fri Jun 21, 2013 4:33 pm

Quoting babybus (Reply 36):
I don't want it to disappear but I do wish it could look at itself and change. BA really do need to dump it.

Why can't so many people get that it is not a BA problem; it is not for BA to solve the problems at IB; it is not BA running IB. BA and IB (and soon to be VY) are sister companies, owned by IAG. It is for IAG, under Willie Walsh (who yes, has led BA, but no longer does) to decide what happens with IB if things can't be turned around. The logic for IAG being formed was that IB was to bring to the table across the South Atlantic what BA brings on the North Atlantic. They are not the same airlines, and serve different markets, but that was the purpose of bringing them together under the umbrella of IAG with hubs in LHR (BA > North Atlantic) and MAD (IB > South Atlantic, i.e. Latin America).
Let's Go British Caledonian!
 
Viscount724
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sat Jun 22, 2013 1:50 am

Quoting babybus (Reply 36):
On a personal note I would never travel with Iberia again.

Their network to Latin America is still hard to beat. How many other European carriers serve 13 countries in Latin America?
 
BA0197
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sat Jun 22, 2013 2:34 am

Quoting Viscount724 (Reply 39):
Their network to Latin America is still hard to beat. How many other European carriers serve 13 countries in Latin America?

None, and maybe for a good reason. It is folly to lose money at the expense of saying that "we fly to the most Latin American counties of any European airline". I frankly never found much credibility in that. Generally speaking EU-LA is not as profitable as BA's main feed- EU-NA. I'm sorry but I really do fail to see the lure of an airline like IB (even before they merged).
 
Summa767
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sat Jun 22, 2013 8:59 am

Quoting Viscount724 (Reply 39):
Their network to Latin America is still hard to beat. How many other European carriers serve 13 countries in Latin America?

Part of Iberia's problem is there is more competition and thus they don't dominate anywhere as much as they used to. They may still be just about the leading airline from Europe to LatAm, but other carriers, both European and Latin American have been taking some market share away from Iberia, and shaving its margins.
Competing on price -because we all know that service is not Iberia's forte- is not a good thing for an airline with high costs.

For years, even at the top of the economic bubble, it was said that Iberia lost money on its short haul operations, but its long haul made up for it. There are still 8 long haul routes that are profitable for IB (by their own admission), but clearly the margins, even on the profitable long haul, have been eroding over time.

In fact 2007 was the last year where IB flying operation made any profit.

How many destinations are exclusively served by IB from Europe?
GUA, SAL, SJO are the only ones I can think of.

Take the case of PTY. It used to be exclusive to IB, which it currently serves with 4 weekly frequencies. And yet KLM that started serving i 3 or 4 years ago, it's now a daily operation. Moreover, AF will start service too come November. And more will follow.
That is a picture of what is wrong with IB: In its years of dominance, it clearly did not do much to captivate its passengers. New entrants have instant appeal.

In LIM, AF now serves it, as well as KL. IN BOG, LH started operations a couple of years ago and now has the same frequency and equipment as IB: A daily A340.
That is not to mention the latin carriers. LAN serves MAD from several points in South America. Avianca now dominates the Spain-Colombia market with 3 daily A330 flights to MAD from Colombia, and a 4 weekly service to BCN, when a few years ago it had a single daily 767-200 vs a daily IB A346. Well, IB's offer is the same today.

The main danger that I see, is the denial that some people in Spain about these facts, get in the way of the restructuring needed to bring IB up to a competitive level. As far as many employees are concerned and some in the general public is that IB's ills come from "the English".
Allegedly even the call centre operators try to blame any problems on "BA". Having dealt with them in the past, I can quite believe that level of unprofessionalism.
 
cv990Coronado
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sat Jun 22, 2013 9:40 am

Quoting factsonly (Reply 35):
Quoting factsonly (Reply 35):
There are three major reasons why BA/KL did not materialise;

1. To much overlap between the two airlines, their network strengths are very similar - i.e. not complimentary (AF-KL networks are more complimentary to one-another).

2. Proximity between the two hubs, leading to overlap and competition. (though CDG AMS is not much different)

3. The BA leadership demanded too much control over the joint venture, no acceptable balance between the partners. (AF was more sensitive to Dutch pride.)

The positive sides were:

- Cultural match
- Business match
- Financial strength

Very good analysis. One more positive in my opinion it would have helped BA resolve it's LHR and London runway capacity problems.
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1400mph
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sat Jun 22, 2013 10:03 am

Quoting cv990coronado (Reply 42):
Very good analysis

maybe but what about...

Quoting factsonly (Reply 35):
- Financial strength

Overall performance has not been great but combine that with relative share price and market cap and it's currently abysmal and we are now some years on from the creation of the merger.
 
vv701
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sat Jun 22, 2013 6:29 pm

Quoting Burkhard (Reply 27):
An easy way to save many million pound would be to fire the BA management that was responsible for the IB takeover..

IB was not taken over by BA. They were effectively both brought into IAG ownership when IAG was formed.

International Consolidated Airlines Group is a Spanish registered company whose shares are quoted on both the London and Madrid stock markets. However IAG has its HQ in Madrid. It is a Spanish registered company. So it ie required by Spanish Company Law to hold all shareholders' meetings in Spain. Hence the recent AGM (as well as last year's and next year's) was held in Madrid.

When IAG was formed 55 per cent of its shares were distributed to the previous owners of British Airways shares in proportion to their holding in BA. Holders of Iberia shares received 45 per cent of the equity of IAG again in proportion to their previous holding in IB.

Currently a holding in IAG shares that was converted from BA shares is worth more that the equivalent holding in BA shares just prior to the formation of IAG.

Although not relevant to ownership it is worth noting that BA operations are controlled by a company (BA Ops.co) that is 51 per cent owned by a British company and 49 per cent owned by IAG. However financially BA is a 100 per cent subsidiary of IAG.
 
cedarjet
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sat Jun 22, 2013 8:50 pm

Hilarious that IB think BA are robbing all the profitable parts of the business. Yeah, really? Do you know IB's most profitable route is LHR-JFK? That's right - the codeshares on other airlines make them money. So the perception of the staff* in Spain is the opposite of the truth. Nonetheless there is so much anti-BA sentiment in MAD cos this horrible basket case of an airline can't look in the mirror that the A380 trial flights will be to FRA instead.

God only knows what BA / WW / IAG ever saw in Iberia. Extra routes to Latin America? Pffft - just cos BA have always been weak in that corner of the world and had an inferiority complex about it... How about just increasing capacity from London with BA 747s to a couple of cities and codesharing beyond them on LAN? Why was that - which would have cost nothing - such a bad idea?

* every one of whom I've ever come in contact with in my as-few-as-possible IB flights has been rude and unhelpful
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Eagleboy
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sat Jun 22, 2013 9:24 pm

Quoting r2rho (Reply 13):
Walsh couldn't care less about IB as an airline, but he does care a lot about their AOC, their bilaterals, and MAD T4.

Indeed....as WW has shown in that past he has no sense of history or nostalgia. Cold hard financial logic drives him.

If he see's an opportunity to close and relaunch Iberia as a different company using the Vueling AOC he will. He will fire and rehire the IB staff if he thinks he will get away with it.
 
skipness1E
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sat Jun 22, 2013 10:15 pm

Quoting Eagleboy (Reply 46):
Indeed....as WW has shown in that past he has no sense of history or nostalgia. Cold hard financial logic drives him.

That's his job, as CEO he knows tens of thousands will be out of work if he messes up. MBA types have to be focussed like a laser beam, nostalgia and history are nice to have in the good times but an unaffordable luxury in the bad times.
 
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seahawk
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sun Jun 23, 2013 9:13 am

IB has so many prolbem.s Today the South American carriers offer a better product than Iberia. LATAM, Avianca and Copa are all strong and well connected. If I had to choose between LH from FRA (or KLM from AMS) and then connect in South America via LATAm or Avianca compared to connect via Madrid, I would always avoid Iberia. The service of Iberia is a joke. I mean Iberia Express serves German airports and everybody knows that the traffic between Spain and Germany is huge, yet they as of today still have no German website. So how to compete with Air Berlin, LH, DE, TUifly and all the others? Vueling has a German website btw.
 
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par13del
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RE: IAG AGM: Walsh Calls IB Situation Critical

Sun Jun 23, 2013 11:01 am

Quoting comorin (Reply 1):
So why did IAG/BA buy Iberia?
Quoting Bongodog1964 (Reply 2):
The Spanish economy has bombed, their growth has proved to be unsustainable.
Quoting GCT64 (Reply 6):
BA could create a Spanish subsidiary
Quoting seahawk (Reply 10):
Should BA not be able to stop the red ink,
Quoting r2rho (Reply 13):
Walsh couldn't care less about IB as an airline,

Sounds as if BA is in charge, a far different cry from when the merger was announced a few years ago, a pity the search function on a.net is so poor, those threads in the archive are classics.

Quoting BA0197 (Reply 16):
Obviously IAG keeps operate funds to operate their owned airlines, correct? So if IB were to go down the drain, this would have no effect on BA one would imagine?

If nothing is consolidated what exactly was the purpose of the merger and how exactly was IAG supposed to benefit, one carrier's is unprofitable, ok, the other is profitable, ok? Somehow I don't think it is that simple, nor as simple as just doing bulk purchases for each carrier.

Quoting babybus (Reply 36):

BA and Iberia as airlines are as different as chalk and cheese. It was a partnership that could never really been seen as credible or long term. It was a BA gamble.

It should also be noted that at the time BA was also having some issues, including but not limited to staff and government implementation of new taxes and BA heavy reliance on premium traffic which had taken a big hit during the GFC.

Now the conspiracy theorist could debate whether the rapid recovery of BA and the continued decline of IB which the merger was supposed to arrest was / is an attempt to eliminate another premium carrier in the EU.......

Quoting VV701 (Reply 44):
IB was not taken over by BA. They were effectively both brought into IAG ownership when IAG was formed.

Someone to put us back on track.