IAG CEO Update

Transcript

Willie Walsh:I think Aer Lingus has a very effective business model, very strong leadership, and they've clearly identified the opportunities in advance of everybody else, and they have an eye to the future. So, you know, the performance in 2016 was stunning, and 2017 we hope will be as good, if not better. And clearly the management team there is driven to deliver these sort of returns on a on a sustainable basis? Iberia is doing really well. You know, Iberia is coming out of major restructuring. There's still more work to do to restructure that business, but I describe Iberia as a full transformation. You know, it's not just restructured its cost base, it has transformed the business. The brand is better than it's ever been. The atmosphere within the company, the morale, the operational performance, the financial performance— that is a very different company today. There's more work to do, but it's heading in the right direction and we expect it to do extremely well going forward. We believe there is a profitable segment of the market that can be served by a new airline, a new airline brand. We wouldn't do it if we didn't think we could make money and achieve the targets, financial targets, that we've set for the other airlines. So we looked at our existing brands and challenged ourselves as to whether our existing brands could be stretched into that customer segment, and we decided that actually it was better to create a new brand. So we're very excited. Advanced sales have been phenomenal, really surprised us. We start flying on the 1st of June from Barcelona to Los Angeles, and then we do San Francisco, Punta Cana, and Buenos Aires. But the performance to date— and clearly we haven't done any flying yet— but the performance to date has been really encouraging. Qatar are very clear, it's a financial investment. So they saw IAG as a strong performing company and they wanted to invest in that for financial return. It's very different to what, you know, the Etihad strategy, which was this equity alliance. So we work with Qatar on strategic and commercial issues, but that's completely independent of the investment that they have with us. So there is a separation. Their investment in IAG is for financial reasons. The relationship we have with them is for commercial reasons, and the two can operate side by side or can operate independent of one another. You know, as airlines, we've always had a lot of data. You know, I talked about yesterday, you know, we've collected the data for years. for decades. What we now need to do is to connect all of that data in a sensible way so that we can generate value to our business and create, you know, financial value. And we're seeing that already. I think this is an area that hasn't been at all exploited, to be honest with you. So we're at the infancy of how airlines can now use data in a much more efficient way for the benefit of our customers and for the benefit of the cost base and the revenue base of the airline. I'm very excited about it. We recognize we have talents within the organisation, but there's incredibly talented people outside doing very, very smart things, and we would never be able to create some of the new initiatives that these people are doing. So we thought, well, why don't we bring them in and let's see, can we learn from them and offer them the opportunity to learn from us? And that's what's happened, and it's been very successful. We've learned a hell of a lot, and I think these new small entrepreneurial startups have learned a lot about how to deal with an organisation like IAG. So it is mutually beneficial, and we've taken the decision to invest invest in 2 of the companies that we took through that programme, and that's because we believe there's real opportunity there. So that's been a great learning exercise for us. Well, I think we've always got to focus on the basics. You know, this is an industry that's always moving forward, but if you're not focused on your cost base, always looking to improve it, it's not good enough that we say, you know, our costs are flat or they've gone up by less than inflation. Not good enough. You know, we have an approach within IAG where we want to drive our controllable costs down year on year, and we believe there's an opportunity to do that. Then you've got to deliver what you promised to your customers. You know, make the promise and deliver it on a consistent basis. So a lot of what we'll do will be just keep doing what we've always done, but just do it better. But I think going forward then, it's exploiting the opportunity that we have through data, looking at, you know, how we distribute our products in a more sensible way. And that's clearly an issue that the whole industry is looking at. So a lot of challenges for us, but I think a lot of opportunities as well.

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