IAG paints an optimistic horizon for its airlines. The group led by Luis Gallego told investors yesterday that it expects Iberia and Vueling to earn 1.5 billion euros in the medium term. The British group’s business in Spain is a priority, Gallego explained. In the first nine months of the year alone, the Spanish flag airline earned 821 million, while Vueling had a profit of 378 million.
At the Capital Markets Day, which was held in London, IAG set out its plan to “take advantage of Spanish businesses”. The holding considers that, although the North American area will continue to have more weight in the income statement, the routes with Latin America and the Caribbean represent a “very good opportunity to grow faster”. That is why Iberia and Vueling, and also Level, although to a lesser extent, will try to increase their presence in three main areas: Brazil, northern Argentina, Paraguay and Bolivia, and Mexico. The aim is to fly to secondary cities, beyond the main destinations. IAG believes that with this scenario, Spanish airlines are in a position to scale up the group’s balance sheet to achieve “a more appropriate balance and a greater diversification of profits in their portfolio”.
These plans for the Spanish area are designed without taking into account the integration of Air Europa into the holding company. IAG is about to officially present the merger file to the competition authorities in Brussels, which will begin the official analysis. The integration is planned for the end of 2024.
In addition to the Spanish pillar, IAG has established three other strategic priorities for the period 2024-2026. Among these priorities is the group’s transformation plan, which aims to improve the efficiency of operations and the customer experience. The holding also plans to bet strongly on British Airways in the coming years. Specifically, the British airline will receive an investment boost of 750 million pounds until 2026 in the improvement of its information technology systems, and a further 100 million in the development of better operations. In addition, it is necessary to add a renewal of the fleet for more than 6,000 million.
The fourth pillar of IAG’s strategic plan is the improvement of the customer loyalty program, a bet that, according to the company, “offers high margins, growth with a low capital requirement and sustainable cash flows”.
IAG has also promised to restore the dividend in the medium term: “We will return to dividends in a careful and sustainable way once the investment program and the balance sheet are secured”, explained the group.
