My first minor question is what his role will be in those three months and what power of decision will he have? Normally, if one leaves an important post then that is that as we do not want godfather figures influencing things in the background.There is no worse thing than backstreet drivers.
Willie Walsh instigated the takeover of Air Europa to which this blogger was against initially. This is a Spanish airline flying out of Madrid Barajas domestically, throughout Europe and internationally to Latin America. However, considering that LATAM had suddenly fallen into the hands of Delta (part of Skyteam) while AF-KLM was organising the integration of Air Europa into a joint venture also in Skyteam, the takeover of Air Europa is not after all a bad idea even if the only consideration were to put a spoiler on AF-KLM plans. That is one last ditch action which has still not been completed. Is that the real reason for WW´s departure a long way before the two years prenotice are up?
|Air Europa A330|
However, we have to take into consideration that it is not a done deal and will not be until the end of the year. There is speculation that the Spanish and/or European competition authorities might well think that the concentration of the Spanish airline market into basically two big carriers, Iberia (and Vueling and its group) plus Ryanair is a step too far. It is most likely going to be a condition of the takeover that Iberia sheds some routes and most certainly slots at Madrid Barajas from its domestic network. On the international stage they might question the competition available on routes to South America. The takeover could well mean an unacceptable concentration on some routes, meaning Iberia might well have to reduce frequency on some popular routes so that other competing airlines can step in. If the conditions for merger become too onerous then IAG could well call off the takeover, having to pay the penalty clause in the process.
Air Europa is part of the Globalia travel group. Its owners are divesting the airline from the group in order to concentrate its future investment in the high-speed rail market in Spain. That would mean they could go back to the original plan of forming a joint venture with fellow Skyteam members AF-KLM on routes to South America. This would be a real threat to Iberia. One has to remember that Air Europa is no minor airline as it flew almost 13 million passengers in 2019. It might even sell out to AF-KLM. What is IAG s Plan B if there is one?
Let us look at IAG´s situation at the end of January 2020.
-There has been great movement to try and prove that the company is able to operate in Europe despite having a large number of British and non-EU shareholders.That might well get accepted. But what is it now, a Spanish company?
-BA, Iberia, Vueling and Aer Lingus seem to be achieving their financial objectives, though nobody who I have read speaks well of Iberia nor Vueling and few of BA. On the other hand the group seems stuck in a mold and is not moving. Maybe the takeover of Air Europa will give it a push.
-Worse still, nobody speaks of LEVEL. For an up and coming supposedly dynamic company this is not good enough. The structure is inexplicable and a mess. It has one head man (who cannot be called COE) but is run by three companies, Iberia, Open Skies and Anisec. It does not get promoted but now news is filtering out. It stops flying Vienna to London and might close down the base altogether, and suddenly announces the cancellation of sales on its routes from Paris to Boston and Las Vegas. The latest rumour is that LEVEL is even to be closed down altogether. There are no headline advances as there were in the Ryanair and Easyjet formative years. Also the website is very uninformative as it is difficult to see exactly when and where LEVEL flies to the destinations from it bases.
-Now the game of musical chairs is falling into place. Willie Walsh is going to be replaced by Luis Gallego as chief executive of IAG, Antonio Vazquez as IAG Chairman, Alex Cruz is COE of BA, while Javier Sanchez-Prieto becomes CEO of Iberia, Marco Sansavini takes over at Vueling. All of these men might well be highly capable and even successful for the company. However, I feel uncomfortable that there is no northern European in the picture, be the person Anglo-Saxon, German or Scandinavian.This is not a racist question but one of culture for me. An international airline needs input from experts with experience from all over the world. In this particular case that means executives with understanding of northern European markets (JUST WHERE IAG HAS A WEAK PRESENCE)
Is Finnair going to be snatched from IAG´s grasp? Finnair is also a member of the oneworld alliance with IAG. For some time there has been speculation that Finnair would join IAG as it could not go very far on its own. Its home market is small and it is making its mark, quite successfully at the moment, by offering the shortest routes to the Far East over Russia. It flies over 13 million passengers per annum. However, if it were the case that it had to merge with another airline it might be tempted to leave oneworld and the possible IAG orbit. LATAM was firmly embedded in oneworld and forming a joint venture with American Airlines until Delta came along and snatched it away putting a spanner in oneworld plans. The same or similar outmanoeuvring should not be allowed to happen again.
|SAS A350 (c) ArthurC|
Norwegian is still very interesting for IAG. Apart from its network within Scandinavia and from London Gatwick it offers the opportunity to extend its LCC network throughout Europe. The airline is recovering from near bankruptcy 12 months ago and is on the way to becoming profitable. The main advantage of this carrier, apart from its European network, is the long-haul network of routes from Oslo, Amsterdam, Paris, London Gatwick, Barcelona, Madrid, Rome and Athens. Whether it can still remain independent or not is a moot point. It claims to carry 37 million passengers annually.
But Norwegian or not, a very rich area and clientele of Europe cannot be ignored. Thus the alternative of SAS. This has the advantage of not competing with Finnair, as does Norwegian, at its home base of Helsinki so would make the two airlines complementary. SAS covers Denmark, Sweden and Norway extensively The annual traffic of SAS is more than 20 million passengers.
|Condor B757 2020 (C)Alejandro Hernandez Leon|
All these companies would all make excellent fishing grounds for talent. But is IAG going to do anything about the perceptions about lack of movement because at the moment it seems to be in a rut. At the very least it needs to change the impressions.
What do I see as the future? In an ideal future this blogger sees the individual companies inside IAG making their headway. In the low cost market Vueling would occupy itself with mostly southern Europe, the Mediterranean and North Africa. Norwegian would mostly occupy the market north of a line from London to Moldova. LEVEL would be the hybrid long-haul airline flying from the cities already mentioned as its exit points as well as those already offered by and instead of Norwegian. It would be neither a full service airline nor a low-cost one - something which has not as yet been developed. LEVEL would also offer flights from other European cities which are not in direct competition with other IAG airlines - such as Geneva or Lisbon for example. Air Europa would be absorbed into Iberia, and Corsair into LEVEL. Meanwhile Finnair, LOT, and Condor, as stand alone airlines like Aer Lingus, would join the full service airlines of BA, Iberia and Aer Lingus in offering coverage of the vast majority of Europe - something it does not do at present. That way IAG will have ensured itself as a strong all Europe airline group - but would that be enough?