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International Consolidated Airlines Group, S.A. (IAG.L)

LSE - LSE Delayed Price. Currency in GBp
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193.80+18.40 (+10.49%)
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Neutralpattern detected
Previous Close175.40
Bid191.95 x 0
Ask192.15 x 0
Day's Range182.95 - 194.00
52 Week Range2.20 - 684.00
Avg. Volume25,845,023
Market Cap3.849B
Beta (5Y Monthly)1.51
PE Ratio (TTM)1.21
EPS (TTM)160.10
Earnings DateOct 30, 2020
Forward Dividend & YieldN/A (N/A)
Ex-Dividend DateJul 02, 2020
1y Target Est7.17
  • Role Reversal: Passenger Airlines Make More From Cargo Sales In Q2

    Role Reversal: Passenger Airlines Make More From Cargo Sales In Q2

    Add Air Canada (OTCQX: ACDVF) and IAG Group (LSE: IAG), parent of British Airways, to the list of passenger airlines that significantly increased cargo revenues in the second quarter even as the coronavirus crisis otherwise destroyed the industry's finances. Air France-KLM (CXE: AF) and Aeromexico also came out ahead on cargo in last week's earnings results, something many competitors, such as Cathay Pacific (Pink: CPCAY) and Delta Air Lines, Inc. (NYSE: DAL), were unable to do.In each case, cargo revenues notably grew even though shipment amounts were much less and represented an inordinate share of total revenues, completely reversing the typical balance. The results underscore recent market research by World ACD that airlines collectively achieved a 21% increase in cargo revenue despite an 18% drop in volume from the same period last year. Cargo revenue at Air Canada grew 52% year-over-year to CA$269 million (US$200.5 million), representing a stunning 51% of total revenue after only contributing 3.7% of revenue during the same period in 2019. The airline's cargo sales went up 18% during the first half of the year, according to last week's earnings report.IAG Cargo posted a 33% jump in cargo revenue to 369 million euros ($434.5 million) during the quarter and a 10.6% increase for the six months through June. It contributed half of the group's revenue compared to 4.2% a year ago. They joined United Airlines in producing outsized revenue gains for cargo while many direct competitors suffered revenue and volume declines."For the first time ever, our cargo revenues exceeded passenger revenues in the quarter," Air Canada CEO Calin Rovinescu said Tuesday in a news release. "Over the course of the pandemic and through the second quarter we've continued our focus on airfreight to meet immediate and exceptional demand for medical equipment, critical goods and the regular movement of time sensitive air cargo."When passenger demand dried up, Air Canada, IAG and Air France-KLM quickly adopted the passenger-freighter concept — putting idle planes into dedicated cargo service for freight forwarders and other shippers desperate to find air transport. Air Canada was one of the first airlines to remove seats from some twin-aisle aircraft – four 777-300s and three Airbus A330s – to increase available capacity for personal protective equipment and other light loads. IAG, which includes Iberia and Aer Lingus, and Air France-KLM also removed seats and placed cartons in seats and overhead bins of some aircraft. Strapping cargo to seats and putting it in luggage compartments adds about 40% extra capacity, or the equivalent of about six large pallets in the lower hold, according to airline industry officials.Since March, Air Canada has operated more than 2,000 scheduled and ad hoc cargo-only flights around the world, including to New Zealand and Australia. The quasi-freighters represented 38% of all widebody flights and more than 40% of total cargo revenue, the airline said.For each airline, pricing, not volume, drove higher revenues.Cargo rates skyrocketed in the spring, with some trade lanes, such as China to the U.S. and Europe, five times above the normal peak season level. Rates have since fallen considerably but are still higher than normal for this time of year because of ongoing shortages. Airlines are slowly adding flights, but about 30% of normal air cargo capacity is still on the sidelines because they are operating very truncated passenger networks, based on recent industry data.IAG Cargo, which flew 1,875 cargo-only flights during the quarter, said cargo yields soared 225% above the equivalent 2019 period as tonnage fell 51.2%. Cargo activity also involved 615 charter flights for specific customers, including 416 missions to supply hospitals under contract with the British, Irish and Spanish governments. All told, the airline group transported more than 11,000 tons of personal protective equipment and medical supplies on charters, not including shipments transported on scheduled routes. "We rapidly developed one of the most comprehensive networks of scheduled cargo-only flights available; a network of over 340 scheduled flights per week built around our customers' needs and tailored to the most important cargo flows," said IAG Cargo CEO Lynn Embleton in a statement. "We have reconfigured aircraft to maximize cargo capacity, removing seats and using overhead lockers. These were important capacity solutions, albeit ones that brought additional operational complexity and cost."In 2019, IAG Cargo had commercial revenue of $1.3 billion. It is ahead of last year's pace at $724 million through the first six months of 2020.Air Canada doesn't release figures for cargo volume.Another passenger-dominant carrier that had a solid quarter in cargo was Air France-KLM. It posted a 5.2% gain in currency-adjusted cargo revenue to 566 million euros ($665 million) even with tonnage plunging 46.4%. Again, cargo was the dominant business line, representing 60% of total revenues. Air France-KLM's cargo load factor, which was influenced by a 56.3% drop in available capacity, shot up 16%, to 74.7% versus a year ago. Aeromexico, which lost $1.2 billion in the second quarter, said cargo revenue increased 35.5% to $61.7 million, reflecting demand to move personal protective equipment and other COVID supplies.Earnings lowlightsExcluding cargo, the earnings picture was gloomy for Air France, IAG and Air France KLM.Air Canada's second-quarter revenue plummeted 89% to US$393 million, nearly mirroring a 96% decline in passenger traffic and resulting in a $1.1 billion operating loss. A year ago, sales topped $3.5 billion and the airline produced a $314.7 million operating profit.The Canadian carrier has raised $4.1 billion in capital since March and said it has $6.7 billion in liquid assets. It plans to operate at about 20% of normal capacity in the third quarter, up from 8% in the second quarter. CEO Rovinescu continued to express frustration with the federal and provincial governments for maintaining severe travel and border restrictions and quarantines, "effectively shutting down most commercial aviation in our country." He told analysts that without government or relief from travel restrictions Air Canada will look at other opportunities to reduce costs, including more route suspensions and possible cancellations of Boeing and Airbus aircraft on order.Canada has closed its border to foreigners through Aug. 31 despite slowing case counts. Canadians who enter the country must stay at home for two weeks. Analysts say the lack of government aid has put Air Canada at a disadvantage relative to international competitors receiving bailouts.Steps taken to stem cash outflows include reducing the workforce by 20,000, or more than 50%; slashing fixed costs and capital investments; retiring 79 aircraft — about 30% of the combined fleet for Air Canada and low-cost subsidiary Air Canada Rouge; and reducing network capacity. Air Canada projects lowering its daily cash burn from $14.2 million to between $11.2 million and $12.7 million in the third quarter.European carriersIn the second quarter,IAG Group suffered a record $1.6 billion operating loss, with revenue down 89%, to $870 million. It wants to raise $3.2 billion from shareholders, with backing from Qatar Airways — its largest shareholder — to increase liquidity and stay in business. British Airways is only flying about 15% of its normal schedule and has said it needs to cut 12,000 jobs and rewrite contracts for 30,000 more personnel. The holding company said it expects to increase capacity to 26% of last year's level in the third quarter and 54% in the fourth quarter, but plans could change if governments close borders and order more quarantines. Officials said they expect to reach cash-flow breakeven during the fourth quarter through rigorous reductions in operating and capital expenses. Deliveries of 68 new aircraft due between 2020 and 2022 have been deferred, while 32 Boeing 747s and 15 Airbus A340-600s are being retired early."We continue to expect that it will take until at least 2023 for passenger demand to recover to 2019 levels," IAG CEO Willie Walsh said. "Each airline has taken actions to adjust their business and reduce their cost base to reflect forecast demand in their markets not just to get through this crisis but to ensure they remain competitive in a structurally changed industry."Meanwhile, Air France-KLM Group reported a $1.8 billion operating loss in the quarter driven by only 4% of the prior year's passenger traffic, which caused revenue to crash 84%. A big factor behind the $3 billion net loss were large impairment charges for Airbus A380 and A340 aircraft. The company decided to discontinue flying the A380 early this year.Air France-KLM said it expects to operate at 45% of normal capacity in the third quarter and at 65% in the fourth quarter, with minimal long-haul flights due to declining customer interest.On Friday,KLM said it will eliminate 4,500 to 5,000 positions that are no longer needed to operate as a smaller airline during the next two years, part of its restructuring deal with the Dutch government for financial support. About 1,500 positions, including 500 ground staff, are tapped for involuntary layoffs. The rest of the reductions come from not renewing contracts for 1,500 temporary workers, offering 2,000 employees voluntary separation packages, and not filling 500 posts when workers retire. KLM didn't rule out further cuts if business doesn't improve.Air France's restructuring plan calls for dropping 6,500 positions, or 16% of its workforce, by the end of 2022. The full plan will be unveiled in October. Click here for more FreightWaves/American Shipper stories by Eric Kulisch.RECOMMENDED READING:Air Canada raises 0 million to boost liquidityVirus slows airlines from adding capacity, airfreight volatility increasesIATA outlook for airline industry recovery slides to 2024See more from Benzinga * Commentary: Will Reinsurance Stabilize Trade Flows? * Buoyant Air Freight Markets Boost Earnings At Expeditors * Union Pacific Says Its California Police Force Won't Check Immigration Status(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • Bloomberg

    The World’s Jumbo Jets Are Heading for the Boneyard

    (Bloomberg Opinion) -- The queens of the skies have fallen on hard times.As Covid-19 has frozen the international travel on which they once thrived, double-decker, four-engine planes like the Airbus SE A380 and Boeing Co. 747 are more likely to be found in storage than soaring through the skies.Carriers such as Pan Am Corp. used the 747 to turn aviation into a global industry in the 1970s, and over the past decade Emirates used the A380 to repeat the trick for the global south — but those times have passed. Since mid-March, most have barely flown except on short hops to maintain pilots’ certifications and valedictory voyages to gather dust in desert boneyards.Many of those furloughs look like becoming permanent. IAG SA’s British Airways has announced plans to ground the largest fleet of 747-400s for good. Qantas Airways Ltd. sent its last 747 home to the U.S. last week, and has already suspended its stable of A380s.Among the 15 operators of the A380, which entered service less than 13 years ago, only Emirates has been operating flights in anything close to a normal fashion, according to data from aircraft-tracking site Flightradar24. Out of its 115 such planes — about half the global fleet — just a dozen have been flying to and from Europe over the past month or so, as limited traffic has trickled back. China Southern Airlines Co. has also been running a limited service with its five A380s.However, the vast majority of the planes — worth some $50 billion, if valued at about half of their list prices — have been stuck on the tarmac, possibly permanently. Qatar Airways QCSC has speculated that its A380s may never return, while Deutsche Lufthansa AG has made similar noises.By the time the long-haul routes for which the A380 was designed return to normal in 2024 or so, about half the fleet will be at least a decade old and well on the way toward retirement. Singapore Airlines Ltd., the biggest operator after Emirates, said in first-quarter results that it may write down “older generation aircraft” such as its A380s by around $1 billion.It’s a similar picture with the 747. Of the 29 planes operated by Lufthansa — the largest passenger fleet, once British Airways’ jets have retired — just four have remained in regular operation since March, with a further four gradually returning to service over the past two months.Probably the most active operator of passenger 747s at this point is Aeroflot PJSC’s Rossiya Airlines, plus a handful of charter operators that run seasonal flights to holiday destinations and pilgrimage services to Saudi Arabia. Even there, though, foreign pilgrims at this year’s hajj will be confined to 10,000 people already in the country.The reasons for the decline of these jets aren’t hard to discern. Even at the best of times, it can be challenging to fill more than 400 seats at a time, and a plane with more than 20% of seats empty will typically lose money — and that’s before you start thinking about the costs of providing crew and destination accommodation for such vast aircraft.With the Boeing 787 and Airbus A350 able to achieve similar ranges using just two engines and smaller cabins, the economics of double-decker planes no longer make a lot of sense.U.S. airlines in particular have long since given up on the jumbo. They never bought a single A380, and last took delivery of a 747 a few months after the Sept. 11, 2001, attacks, when Northwest Airlines Corp. bought two before later going bankrupt and being taken over by Delta Air Lines Inc.There’s one area that’s been booming, however: freight. Air cargo typically takes up a substantial share of the belly space on passenger flights, but with borders closed to tourism, the semiconductors, high-value materials and consumer goods that typically travel beneath your feet have had to find a new route to market. Cargo traffic this year will be down just 17% from a year earlier, compared to 55% for passenger flights, according to the International Air Transport Association.That could provide a final chapter for the 747 — although not for the A380, which isn’t easily converted to cargo usage. Boeing’s jumbo is already a freight aircraft in all but name, with about two-thirds of the latest 747-800 variant being sold to freight carriers such as United Parcel Service Inc. and Cathay Pacific Airways Ltd.’s logistics arm. Even non-cargo aircraft can get in on the act: KLM has been carrying face masks and protective gowns on the seats of ordinary passenger aircraft pressed into pandemic freight service.That would be an appropriate end for grand planes often likened to ocean liners. Some of the most celebrated ships of the great age of sea transport ended their lives as coal hulks, quarantine centers and floating museums after aircraft rendered them obsolete. The ultimate fate of jumbo jets may be similarly prosaic: As workaday aircraft, shipping goods to a more home-bound global population. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.