I have been thinking about the growth of the IAG airlines in the coming years and this is what I expect to happen, would like to hear other peoples thoughts on the matter:

BRITISH AIRWAYS:

LHR - keep doing what it does best, well connected short haul routes feeding premium business to long haul.

LGW - Small expansion of current short haul routes, continue successful ‘leisure’ focused long haul, expand BA long haul routes with densified 777’s to compete with the threat coming from Norwegian. Likely they will offer some long haul routes that don’t compete with Norwegian too.

LCY - Further short haul route expansion with additional aircraft in the coming years, especially with the £400 million redevelopment of LCY now approved. The additional aircraft stands (C-Series enabled) and the full length taxiway will greatly improve the operation of the airport and enable BACF to expand the operation considerably. They are already the leading Airline at the airport, and I think they will wish to maintain/grow this presence further in the future.

REGIONAL AIRPORTS - Develop more regional flying utilising BA CityFlyer Embraers, including additional aircraft entering the fleet over the coming years (really wouldn’t be surprised if the undisclosed C-Series aircraft order that Bombardier/Airbus have spoke about is for BA CityFlyer. Everyone seems to be focusing on the lack of space for the C-Series at London City Airport, but no one seems to think about how BACF has in recent years expanded (think Stansted) and been profitable. BA was surprised at the success of the regional expansion which is why they are expanding to MAN, BHX and BRS. This initially started as a way of utilising the Embraers during the weekend closure of LCY, but I think the airline has realised the potential to develop this type of flying, especially as the cost base of BACF is significantly lower than mainline BA.

AER LINGUS - Further development of the Dublin transatlantic hub utilising additional A330 aircraft and in the future the 7 A321neoLR aircraft which will be a fantastic aircraft for the airline. Further development of the short haul network across the EU to feed these long haul routes.

IBERIA - Continue cost cutting initiatives, continue to grow long haul routes to further strengthen position in the Southern Atlantic region to South America. BA/Aer Lingus will be the premium/lower cost options in Northern Europe to North America/Canada. Iberia/LEVEL will be the premium/low cost options for South American routes. Iberia shorthaul will tick over but Iberia Express will continue to expand.

VUELING - Will continue to develop it’s short haul network, developing new hubs across Europe and providing feeder traffic to LEVEL/Iberia long haul routes.

LEVEL - Will continue to expand fast. More A330’s will join the fleet over the coming years and I expect to see A321neoLR’s too. The airline will develop its BCN & ORY bases and I still expect to see FCO become a base in the future as Alitalia is a mess and I think the LEVEL brand would be popular in the Italian market.

IAG AIRCRAFT ORDERS - I expect to see IAG make a significant order for A321neoLR aircraft to be utilised across all the IAG airlines. I also think IAG will order the C-series for BA CityFlyer regional expansion. I expect to see the LEVEL fleet grow with leased aircraft for the time being as this is cheaper during the airline’s early growth years. I expect A380’s will be sourced from those being retired from other airlines for BA Heathrow operations unless Airbus give BA a significant discount on new builds (wouldn’t be surprised as would be great publicity for the A380 programme). I think the existing aircraft commitments on order to replace the 747/767/777 programmes are sufficient at this time but we are likely to see top up orders in the future for route expansion.

I have no inside knowledge, this is all my personal opinion.

The regional BA expansion is what I forgot about. It will be seriously interesting to see which way it goes.

Great post. Never thought about IAG this way

Deleted

I think the regional expansion of BACF is overstated here. Yes, when we find that there are flights on a Wednesday from UK regional destinations to non-leisure destinations, I'll agree that IAG has made a significant policy shift. But at the moment all we have are flights at weekends using aircraft that otherwise stand idle thanks to reduced business demand and the LCY weekend curfew. Some of these do include non-leisure airports, because that's where the plane ended up after its last flight of the week from LCY, and there are positioning moves to reach another UK airport, which might as well be advertised since the plane is crewed anyway.
But the bulk of "regional" services are to sun or ski destinations, because that's what the demand is for at weekends.
As far as LCY is concerned, currently there are four parking stands that can hold aircraft the size of a CS100 (or A318), and when the expansion package is delivered this will increase to eleven. However construction work is only just starting and given the difficult nature of the site, progress won't be speedy. Full completion is expected around 2025, by which time the airport is expected to handle 6.5 million passengers per year, up from last years' 4.5 million. The airport is heavily restricted - flights can only operate 06:30-22:30 weekdays, 06:30-12:30 Saturdays, and 12 noon to 22:30 Sundays. There is also a hard cap of 120,000 aircraft movements per annum (each takeoff or landing counts as one movement), and the airport suffers from fog, due to its location in the middle of a dock.

BAorNoWay wrote:

I have been thinking about the growth of the IAG airlines in the coming years and this is what I expect to happen, would like to hear other peoples thoughts on the matter:

IAG AIRCRAFT ORDERS - I expect to see IAG make a significant order for A321neoLR aircraft to be utilised across all the IAG airlines. I also think IAG will order the C-series for BA CityFlyer regional expansion. I expect to see the LEVEL fleet grow with leased aircraft for the time being as this is cheaper during the airline’s early growth years. I expect A380’s will be sourced from those being retired from other airlines for BA Heathrow operations unless Airbus give BA a significant discount on new builds (wouldn’t be surprised as would be great publicity for the A380 programme). I think the existing aircraft commitments on order to replace the 747/767/777 programmes are sufficient at this time but we are likely to see top up orders in the future for route expansion.

g

Conveniently, just last week IAG published their 2017 annual accounts and included was a fleet summary, including outstanding orders and options.
There are 21 A321s actually on order, along with 98 A320s. But they hold options for no less than 128 A320neo series, version unspecified. Any of these could be taken as A321neoLR if required.

In terms of widebodies, they also publish a rolling fleet plan every November. The November 2017 plan showed that all 767s will be gone by the end of this year, Three 777-200 (non-ER) will be replaced by second hand 77W over the next 5 years (discussion in other threads suggests planes coming from LATAM). No 772ERs are due for replacement at all before 2027 so not surprisingly nothing has been ordered yet to replace them. They intend 772ERs to have a 30 year fleet life, and a refurbishment programme is under way.
There are 36 744 now. By the end of 2022 IAG intend to have just 12 left, with the last one leaving the fleet in February 2024. The replacements for the 24 leaving between now and 2022 are indeed on order, 18 A350-1000s and 6 out of an order for 12 787-10s (the other 6 787-10s are for growth). But they will still need to order more planes for delivery in 2023 to replace the final 12 744s. Now IAG (across the group) has options for 3 A330s, 52 A350s (type unspecified), 7 A388s, and 18 787s. Some of the options are held by IAG itself, some by member airlines, but it would be unlikely to say the least that any new aircraft didn't come from the types they hold options for. Bear in mind that there are also 17 A346s in the Iberia fleet. Four of these will leave by the end of 2020, replaced by A359s already on order. The end date for the other 13 hasn't been stated.

I would agree with the above if i didnt actually see BA adding ski and sun services out of the London airports. I guess thats okay because they are making use of equipment that would be standing idly by. Oh that''s just what the regional routes are. That IAG have for years not done something like this then all of a sudden does indicate a fundamental shift especially with it expanding this year. Remember last year MAN was 2 based over the weekend but these "worthless" leisure based flights have done so well, there will be 4 looking at the timetable. And this is from an airline that got previous subsidiaries to drop routes the moment they showed losses and then handed regional flying to Flybe 'as we do not get regional flying'.

Hopefully EI or BA will expand into the Detroit Market sooner rather than later. It is currently the biggest market in the USA that they do not directly serve.

Not mentioned here is whether IAG see any acquisition opportunities in Europe. They lost out on Niki to give them a VIE base for Vueling. The one airline that comes up now and again is AY. Now Finnair would be a good fit fleet wise and a HEL hub would give them an Asian hub to add to LHR (North America, Middle East, Africa) and MAD (Latin America).

Future relationship with Air Italy will also be interesting. The MXP hub is a logical choice given the economic strength of Northern Italy and without the history of AZ they won't be encumbered by the politics that affected AZ when they effectively had to run a dual hub out of FCO/MXP. If Air Italy succeeds I wonder if an IAG investment could be on the cards down the line?

Can we go one thread without “DTW” being mentioned?

FlyCaledonian wrote:

Not mentioned here is whether IAG see any acquisition opportunities in Europe. They lost out on Niki to give them a VIE base for Vueling. The one airline that comes up now and again is AY. Now Finnair would be a good fit fleet wise and a HEL hub would give them an Asian hub to add to LHR (North America, Middle East, Africa) and MAD (Latin America).

Future relationship with Air Italy will also be interesting. The MXP hub is a logical choice given the economic strength of Northern Italy and without the history of AZ they won't be encumbered by the politics that affected AZ when they effectively had to run a dual hub out of FCO/MXP. If Air Italy succeeds I wonder if an IAG investment could be on the cards down the line?

I see an investment in both down the road. Maybe not a takeover of either but a strategic investment. AY is the forgotten OW partner in Europe, mainly because it does it's own thing quite well but should be an investment opportunity for IAG. With QR investing in Air Italy, plus their own investment in IAG, an IAG investment in Air Italy just seems a matter of time.

nomorerjs wrote:

Can we go one thread without “DTW” being mentioned?

Didn't you see it's in the new a.net rules? Mandatory inclusion of DTW in all route expansion threads. If it is not in the first 20 posts, mods may insert.

FWIW, DTW is a terrific airport to make DL connections. The internal train is really cool. I don't get out there any more, which is a shame as it's my best bet to see the new DL A350s.

And back on topic: Wow, IAG has a boatload of NB's on order!

Also worth remembering that Air Italy is already a partner with Iberia so I could really see them going in there with QR and them ending up in OneWorld. Especially with AB gone.

And AY already being in the Europe-Japan JV just makes it extremely obvious choice.

Regardless, I don't think IAG will move on any sort of acquisition until we know what the ownership rules will be for Brexit. I would think they want a boatload of cash reserves at the moment in case they have to buy/sell shares and we'll see if they have to divest ownership of BA (IAG is Spanish, after all). Once all that is clear, I wouldn't be surprised if they go after both airlines at the same time. (should they have the cash available)

Brexit should not be an issue. According to IAG, it is a Spanish registered company which is quoted on the London and Madrid Stock Exchange.
http://www.iagshares.com/phoenix.zhtml? ... utoverview

bx737 wrote:

Brexit should not be an issue. According to IAG, it is a Spanish registered company which is quoted on the London and Madrid Stock Exchange.
http://www.iagshares.com/phoenix.zhtml? ... utoverview

And so if the UK applies UK majority shareholder rules, then IAG would have to divest.

I think the regional expansion of BACF is overstated here. Yes, when we find that there are flights on a Wednesday from UK regional destinations to non-leisure destinations, I'll agree that IAG has made a significant policy shift. But at the moment all we have are flights at weekends using aircraft that otherwise stand idle thanks to reduced business demand and the LCY weekend curfew. Some of these do include non-leisure airports, because that's where the plane ended up after its last flight of the week from LCY, and there are positioning moves to reach another UK airport, which might as well be advertised since the plane is crewed anyway.
But the bulk of "regional" services are to sun or ski destinations, because that's what the demand is for at weekends.

A year down the line and this is still a far too simplistic way of looking at this.

Yes, the aircraft are displaced from LCY on a Saturday, but then we look at the following variables:

1) LCY has been closed on a Saturday for many many years, and BACF got on just fine working around that closure. These weekend routes are a new addition so clearly there was a desire to do more. There is also the fact that as an example, the aircraft at MAN start their routes on a Thu and stopping on a Sunday evening. That’s 2.5 more days of regional flying than the aircraft is ‘required’ to do, rather than ply LCY routes. That’s not just using a completely idle aircraft, is it?

2) These routes could have gone anywhere on the BA network, but they didn’t, they came to the U.K. regions. For example, there is an aircraft at FLR on Saturday. They could have easily run FLR-CDG, BCN or somewhere else on the BA network that had demand, but no, they chose BRS and BHX last year and EDI this year.
Another aircraft was ‘stuck’ at DUB. Last year it ran DUB-IBZ routes, but this year, the aircraft is being positioned to MAN to operate more routes from there. DUB is an IAG hub, there could have been other routes that aircraft ran. If the aircraft was only being used because it was idle, what does it matter to BA where it runs from instead of going to the extra complexity of shifting it over to MAN.

3) BA is a business, they will run flights from where they see a business case. In the case of MAN, it’s been more than doubled this season and got expanded to have a year round operation with ski flights added. To me, it shows there is a valid case to run these flights and seem to be standing on their own 2 feet. As said above, if BA just wanted to use an idle aircraft, they could have chosen to run these flights from anywhere, but as also said, the U.K. regions were chosen. And for the best part, they seem to be paying off.

So can we now move away from this mentality that the weekend region flights are purely using idle aircraft and almost ‘pity routes’, as there is clearly a lot more to it than that.

IB should make a big effort and grow in Asia and Africa using Mad as an ideal hub to connect America-Asia-Africa-Europe. Leaving only one continent out of the equation for obvious reasons. Biside that Barajas is and excellent new airport with plenty of room to grow.

LupineChemist wrote:

bx737 wrote:

Brexit should not be an issue. According to IAG, it is a Spanish registered company which is quoted on the London and Madrid Stock Exchange.
http://www.iagshares.com/phoenix.zhtml? ... utoverview

And so if the UK applies UK majority shareholder rules, then IAG would have to divest.

That is indeed the problem. To complicate things, a major part of ownership of IAG is currently non-European, like 20 % Qatar.
It will require lots of creativity by IAG and lots of tolerance by the authorities to define IB, IE etc having >50 % EU control and BA having >50 % UK control.
Local intermediate companies (like Qatar Luxembourg) may not be sufficient to satisfy the regulations.

Probably UK will not impose majority shareholder rule. If it does, then IAG may have to be split.
In the best case EU changes its rules.