Spain's Bankia stated (26-Jun-2013) it its 12.09% stake in International Airlines Group (IAG) up for sale, as intended as part of its 2012-2015 Strategic Plan which calls for the divestiture of "non-strategic assets". Bankia mandated Bank of America Merrill Lynch and Bankia Bolsa to handle the sale. As previously reported by CAPA, IAG chairman Antonio Velazquez previously said the Group was comfortable with Bankia's participation and would also be comfortable if the firm decided to divest its stake. [more - original PR - Spanish]
Bankia puts its 12.09% stake in IAG up for sale
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IAG faces challenge to maintain momentum in financial performance
IAG is arguably the most financially focused European airline group in terms of the way it motivates and monitors its own performance. It is no coincidence, then, that its financial performance is now consistently stronger than that of the Lufthansa Group and Air France-KLM (although none are as profitable as the leading LCCs, such as Ryanair). IAG's financial discipline is helping to rehabilitate the airline sector's reputation with professional investors.
In 2016 IAG achieved an operating margin and return on invested capital that were, once more, its best ever. This marked its strong recovery in the years since the global financial crisis (which hit it hard), and consolidated its leadership among Europe's big three legacy airline groups. Only Vueling among the group's constituent airlines suffered from falling returns. IAG shareholders are to be rewarded with a share buyback (IAG's first, and still rare among European airlines) and an increased dividend.
However, by its own standards of success, IAG has more to do. It is not yet meeting its own margin and return on capital targets –partly because it likes to increase them when they come within reach. Its challenge will be to maintain its momentum as the airline cycle's upswing starts to fade.
IAG and Heathrow: airport decision welcome, but possible charges issues. Options at other IAG hubs
On 25-Oct-2016 the UK government announced its support for a new runway at London Heathrow Airport. There is still a lengthy set of processes to be observed before a new runway at Heathrow can finally be built. Moreover, opponents are likely to fight a fierce battle to try to prevent it. Even Heathrow Airport does not expect the runway to open before 2025. 2030 is more likely.
Airlines at Heathrow, led by British Airways and its parent IAG, have given a muted welcome to the UK government's decision. However, they are very clear that they do not wish to see airport charges increase as a result. IAG in particular has long been adamant that it will not pay for the expansion through tariff increases at Heathrow. The airport is among the most expensive in the world and its aeronautical yield rose 2.5 times from 2007 to 2014.
The UK government has set its aim on keeping landing charges close to current levels. Heathrow CEO John Holland-Kaye said that the expansion would provide an airport that is fair and affordable; but history suggests that the airport and its leading airline may define these terms differently. However, as this report demonstrates, IAG has other hubs and other airlines that give it alternative growth options.