Photographer: Simon Dawson/Bloomberg

British Airways Parent IAG ‘Relaxed’ About Aer Lingus Talks

IAG SA Chief Executive Officer Willie Walsh said the parent of British Airways is in no rush to complete a takeover of Irish carrier Aer Lingus Group Plc as he continues to negotiate with the Irish government that’s keen to see him meet guarantees.

“We’re very relaxed about it at this stage,” Walsh told journalists on a conference call on Thursday as the company kept its guidance for full-year earnings unchanged. “We’re not under any pressure, nor are we intending to put any pressure on anybody involved in the process.”

IAG is continuing talks to gain approval from the Irish government, a 25 percent shareholder in Aer Lingus, and a decision is likely in “coming weeks,” Transport Minister Paschal Donohoe said Wednesday. The government rejected an indicative bid earlier this year, saying it couldn’t back the 1.36 billion-euro ($1.53 billion) offer unless Walsh guaranteed links between Heathrow and Ireland for more than five years and clarifies employment prospects.

“We do understand that there are some other parties who would like to see it resolved sooner rather than later,” Walsh said. The executive has told lawmakers that London-based IAG would retain Aer Lingus’s brand and a head office in Dublin after a takeover. He’s also looking to lock in the backing of Ryanair Holdings Plc, which has a 30 percent stake in the Irish carrier.

IAG shares fell 3.9 percent to 537 pence at 9:17 a.m. in London, paring the advance to 10 percent this year. Aer Lingus climbed 1.6 percent to 2.35 euros in Dublin.

Cost Discipline

Europe’s third-largest carrier reported a first-quarter operating profit of 25 million euros ($27.7 million), compared with a loss of 150 million euros a year earlier. It was the company’s first ever profit for the quarter, which is traditionally its weakest. Sales rose 12 percent to 4.71 billion euros, in line with analyst estimates.

Walsh, who is looking to expand trans-Atlantic business with the addition of Aer Lingus, said cost discipline at all three of its airlines -- British Airways, Spain’s Iberia and discounter Vueling -- helped drive productivity and keep expenses down, even as the group increased capacity by 5 percent.

“There was a strong improvement both at a group level and with all three airlines,” Walsh said, adding that the North American market in particular produced “consistent positive performance.”

Operating profit was 117 million euros at the BA division, compared with a 5 million-euro loss a year earlier, while Iberia’s loss narrowed to 55 million euros from 111 million euros. IAG’s Barcelona-based discounter Vueling’s losses were little changed at 29 million euros.

Fleet Plans

Walsh said that while the decline in the oil price makes some planes that will be retired more cost-efficient in the short term, it “doesn’t encourage us to retain these aircraft in our fleet beyond their planned retirement date” and doesn’t alter IAG’s plans for its fleet or capacity.

IAG isn’t considering adding more superjumbo Airbus Group NV A380s, he said.

The group’s revenue passenger kilometers, or traffic, which also reflects the distance flown, gained 6.2 percent. IAG reiterated that its full-year operating profit should exceed 2.2 billion euros, compared with 1.39 billion euros in 2014.

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