IAG Shareholders Back $17 Billion Deal for New BA, Vueling JetsRobert Wall
IAG SA investors backed the purchase of jets from Boeing Co. and Airbus SAS worth $17 billion at list price to upgrade the fleets of its main British Airways division and the Vueling low-cost unit.
Shareholders approved the addition of long-haul and narrow-body aircraft by “a sufficient majority” at an extraordinary meeting in Madrid today, the London-based company said, with more than 99 percent of votes cast backing each resolution.
British Airways, which this month began regular services with Boeing 787 Dreamliners and Airbus A380 superjumbos, is adding further planes to replace older models. Investors were asked to back orders for 18 more Dreamliners and 18 Airbus A350s, plus 62 A320s for Vueling, including 32 re-engined Neos.
IAG, as International Consolidated Airlines Group SA is known, plans to tap new long-haul destinations in Asia even as it exits unviable short-haul routes and cuts more than 3,100 jobs at unprofitable Spanish arm Iberia in a bid to achieve 1.6 billion euros ($2 billion) in operating profit in 2015. The group bought full control of Vueling in April for 123.5 million euros, extending its efforts to secure a Spanish turnaround.
The company will probably issue new earnings guidance soon, Anand Date, a London-based analyst at Deutsche Bank with a “buy” rating on the stock, said today in an investor note.
“We already expect a better result versus February guidance,” he said, citing progress the company has made through steps such as the Vueling purchase and restructuring measures.
IAG shares fell 0.4 percent to 339.10 pence in London before the results of the meeting were published, valuing Europe’s third-largest airline by traffic at 6.8 billion pounds ($10.9 billion).
The top-up Dreamliner order includes at least 12 of the largest 787-10s on offer from Boeing since June. The rest will be 787-9s, the mid-sized variant that flew Sept. 17. Deliveries will start in 2017, with the A350-1000s following a year later and all 36 long-haul jets in the BA fleet by 2021.
Barcelona-based Vueling, in which IAG this year took majority control, should see its fleet grow to 125 jets by then.