IAG SWOT: Europe's leading legacy airline group shows financial progress and strategic confidence

2014 looks to have been a positive year for IAG on its path towards value-creating returns. Vueling was part of the group for its first full calendar year and remained IAG's most profitable and fastest growing business; Iberia returned to capacity growth and to profit; and British Airways completed its first full year of operating the A380 and the Boeing 787.

In some ways, all of Europe's Big Three legacy airline groups have been doing broadly similar things in recent years, namely restructuring their network airline businesses and seeking growth opportunities through lower cost point to point operations. However, IAG's execution in both of these areas has been better and this has led to its superior profit performance compared with the other two.

The year culminated with IAG's offer to buy Aer Lingus. The bid was rejected (it will likely come back), but further confirms IAG's leadership among the Big Three, not only in terms of financial performance, but also in strategic confidence to pursue consolidation. In this report, we review IAG's main strengths, weaknesses, opportunities and threats.