IAG selects A350s; convert 787 options

By Victoria April 1, 2013 10:10

IAG selects A350s; convert 787 options

International Airline Group (IAG), and British Airways have signed a Memorandum of Understanding (MoU) to buy 18 Airbus A350-1000 aircraft plus 18 options, as part of the airline’s on-going long-haul aircraft fleet renewal and modernisation strategy.

IAG, owner of both British Airways and Iberia, has also secured commercial terms and delivery slots that could lead to firm orders for Iberia. Firm orders will only be made when Iberia is in a position to grow profitably, having restructured and reduced its cost base.

The choice of the A350-1000 follows British Airways’ decision in 2007 to buy 12 Airbus A380s, the first of which will be delivered this summer. Operating the A380 and A350 together delivers real value to the world’s leading airlines because it allows them to match aircraft capacity to traffic demand on any route.

“The A350-1000 will bring many benefits to our fleet. Its size and range will be an excellent fit for our existing network and, with lower unit costs, there is an opportunity to operate a new range of destinations profitably. This will not only bring greater flexibility to our network but also more choice for our customer,” said Willie Walsh, IAG Chief Executive.

Also in April, IAG reached an agreement with Boeing to convert 18 existing 787 options into firm orders for British Airways. They will be used to replace some of the airline’s Boeing 747-400 aircraft between 2017 and 2021.
For Iberia, IAG has reached agreement with Boeing to secure commercial terms and delivery slots that could lead to an order for Boeing 787s. Firm orders will only be made when Iberia has restructured and reduced its cost base and is in a position grow profitably.
British Airways’ 787s will be powered by Rolls-Royce Trent 1000 engines. The engine order includes a comprehensive maintenance package with total care agreement.
Willie Walsh, IAG chief executive, said: “British Airways has 24 Boeing 787s on order already and we plan to boost this by a further 18 aircraft by exercising our options.
“The aircraft offers a step change in fuel burn efficiency versus our existing aircraft with improvements in fuel cost per seat of more than 20 per cent. New technology engines and improved aerodynamics will lower fuel burn leading to reduced carbon and NOx emissions.
“The creation of IAG has resulted in greater buying power for both airlines through joint procurement and we have been able to obtain delivery slots for Iberia as part of British Airways’ order”.

Meanwhile, IAG has now been joined by Spanish low cost carrier Vueling after the its shareholders accepted IAG’s cash tender offer for the airline, following recommendation by the Vueling board.
IAG’s subsidiary Iberia already owns 45.85% of Vueling’s shares and Iberia’s board agreed not to tender them in the offer. The Spanish National Securities Market Commission (CNMV) has announced on April 24 that 82.48% of the remaining shareholders have accepted IAG’s offer of €9.25 per share. Therefore, the IAG group will own 90.51% of Vueling. The cost of purchasing the Vueling shares is €123.5 million.
Vueling will be a standalone company within IAG with its chief executive Alex Cruz reporting into IAG chief executive Willie Walsh.
Willie said: “Vueling is a great airline and will be a welcome addition to IAG where it will benefit from the group’s financial strength. We plan to retain Vueling’s current business model and management structure and its strong base in Barcelona”.
The acquisition completed on April 26, 2013.

By Victoria April 1, 2013 10:10
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