IAG: capital efficiency can help a European legacy airline group to "show me the money"

Speaking at IAG's capital markets day on 6-Nov-2015, CEO Willie Walsh revealed his fondness for the catchphrase made famous by Tom Cruise in the 1996 film Jerry Maguire: "Show me the money" is his preferred exhortation to management in IAG and its operating airlines, to focus on financial performance when considering any decision.

The impact of this mantra can be seen in IAG's expected 2015 results and its raised targets for 2016-2020. In 2015, IAG expects a 50% increase in earnings per share, and to pay a first-ever dividend to shareholders. Moreover, it looks set to generate a return on invested capital that is higher than its cost of capital for the first time since the group's creation in 2011 (rare among European legacy airline groups). It has also raised its return target for 2016-2020 from 12% to 15%.

One of the keys to IAG's financial performance is that in addition to initiatives to improve its profit margin, it also places emphasis on capital efficiency. It does not ignore the need for new capital investment, but it balances this with a focus on squeezing more from its existing assets.