IAG CEO Walsh Mulls Extra Dublin-U.S. Routes, Keeps Watch on KLM

  • CEO Willie Walsh says more trans-Atlantic routes in pipeline
  • Flights would complement BA arm's crowded Heathrow operation

British Airways owner IAG SA said it’s evaluating further routes between Dublin and cities in North America following its acquisition of Irish flag carrier Aer Lingus, and will announce destinations in due course.

U.S. airports are courting Aer Lingus to offer flights, a trend that has already resulted in IAG committing to serving Hartford, Connecticut, from Dublin starting in September, Chief Executive Officer Willie Walsh said in an interview.

Aer Lingus has been performing well since its takeover, and Dublin Airport has scope for expansion into a trans-Atlantic hub complementing BA’s London Heathrow base, where crowded runways make it tough to add flights, provided the Irish facility’s infrastructure gets sufficient investment, Walsh said.

“I don’t see Dublin competing with Heathrow because the scale of operations will always be significantly smaller, but it has the capacity to grow,” said the CEO, himself an Irishman who once ran Aer Lingus. “And Ireland is a very strong market in its own right. It’s not just a case of serving 5 million people on the island of Ireland; it’s serving 40 million Irish Americans.”

Taxiways, Stands

U.S. technology companies including International Business Machines Corp. and Facebook Inc., which have a major presence in Ireland, are also driving demand, Walsh said prior to addressing the Smurfit Business School at University College Dublin.

While Irish authorities are considering the case for a second runway in Dublin, the near-term requirement is for improved taxiways and parking stands so that planes can arrive and depart more efficiently, fully exploiting the airport’s existing capacity, the executive said.

Aer Lingus currently operates nine routes to the U.S. and Canada, with a 10th, from Dublin to Los Angeles, scheduled to commence next month, followed by an 11th linking the Irish capital with Newark, New Jersey, both using Airbus Group SE A330 wide-bodies. The Hartford service will use smaller Boeing Co. 757s.

Irish Profit

More people are already tapping Aer Lingus’s European connections to fly over Dublin into the existing North American network, Walsh said. The carrier should add 9 percent more capacity this year, making it the fastest-growing IAG business after Spanish discount arm Vueling, with growth spurred predominantly by long-haul demand, he said.

Aer Lingus contributed 35 million euros ($40 million) to IAG’s 2015 operating profit after its purchase was completed on Aug. 18, the group reported Feb. 26, saying the carrier’s outlook for 2016 was better than expected.

Walsh, who formed IAG through a merger of British Airways with Spain’s Iberia before purchasing British Midland, Vueling and Aer Lingus, said there’s plenty of scope for further consolidation in Europe and that more activity is likely even with the low oil price propping up some weaker carriers.

The CEO said turmoil at Air France-KLM Group, where CEO Alexandre De Juniac is leaving after failing to extract cost cuts from pilots, is unlikely to cause a split between its French and Dutch arms, while describing a merger with KLM that was pursued by BA in 2000 as “the one deal that should have been done.”

KLM hasn’t been tainted by its French partner’s issues, and would generate interest “within Europe and outside” should it ever come to market, he said, though the Amsterdam-based business is now deeply integrated with Air France so that it’s “unclear” if the two could ever be separated.

Walsh confirmed that BA is in talks about code-sharing with China Southern Airlines Co., Asia’s largest carrier by passengers, and China Eastern Airlines Corp. -- both members of the SkyTeam alliance that rivals BA’s Oneworld -- in a move that would improve its access to the world’s second-largest economy.

“We’ve got a flexible view within Oneworld about working with airlines outside,” he said, adding that IAG has no ambitions for acquisitions in Asia. BA serves Beijing, Shanghai and Chengdu in mainland China, as well as Hong Kong.

Before it's here, it's on the Bloomberg Terminal.