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IAG Cargo sees growth in first quarter, looks to future

By control on May 11, 2012

The cargo arm of the International Airlines Group experienced a €1 million, year-over-year, growth in reported commercial revenue during the first quarter, despite a 2.2-percent decline in volumes. Capacity for the first quarter finished with a 4-percent increase over the same period in 2011. Getting a head start on second-quarter numbers, IAG officials recently agreed to sell bmi Regional, which operates 18 Embraer jets throughout the UK and northern Europe, to Sector Aviation Holdings for £8 million.

This growth comes a year after IAG Cargo was formed by meshing together the cargo activities of British Airways World Cargo and Iberia Cargo. The job was handed to Steve Gunning, former managing director of BAWC, who has since catapulted to managing director of IAG Cargo. The inference at the time of the launch was that IAG Cargo would stand alone as part of the parent company’s super-strategy group, not only setting out the roadmap for the two new partner airlines, but also creating the business platform for future airline acquisitions.

Things, it would appear, have transpired rapidly. “You are going to be hearing a lot more about IAG Cargo as a brand,” Gunning said. “We are now very much part of the day-to-day business of the airlines, both here in London and in Madrid.”

Three new Boeing 747-8Fs have recently entered IAG's fleet; little time has been lost feeding one of the new freighters through Madrid, via a London Stansted-Cologne-Madrid-Johannesburg routing. “This, of course, allows us to feed other traffic from other key points … within the freighter network,” Gunning said. “This is particularly important in allowing us, for example, to provide a link between Hong Kong and Latin America.”

For a period, a freighter service was added to a second Spanish destination of Zaragoza, but was later dropped. The next item on the agenda, in integration terms, is merging the respective cargo reservation systems, a task slated for early next year.

Ahead of the creation of the new super cargo group, Iberia Cargo had already committed itself to investing $85 million in a new cargo terminal at Madrid-Barajas Airport, with a further $60 million being invested by Aena, the Spanish airport operator. When completed in 2015, the development will include a 40,000-square-meter facility, with 15,000 square meters reserved for perishables. The new terminal will more than double existing handling capabilities for the group at Madrid and improves handling efficiency, being 7 kilometers closer to the main passenger terminals.

Gunning is also already had to welcome another airline into the fold with IAG’s new addition of British Midland International. The formerly Lufthansa-owned British carrier operated a modest European and more distant network, but its single greatest asset was the number of slots it held at London Heathrow, which IAG seemed more than eager to snatch.

“The BMI cargo business was modest by global standards," Gunning said, "but still produced sales of $30 million, which we are happy to add to our bottom line.”

Comments

Submitted by about iberia express on
iberia has launched recently the new budget airline iberia express. There have been problems with the launch of this airline carrier with the pilots of iberia who have opposed it. Strikes have been going on every week till the spanish government, who is ruled supposedly by the conservative party, has decided to place an arbitrator (a spanish judge) to set an award to end the conflict between the directive of iberia and pilots. In the award, which has to be followed by both parties, it whas been set that iberia express could not do long haul flights, that is flights over 6 hours, and could not use wide body aircraft, as the new a330 which iberia has recently bought. So this decision it basically implies iberia express can never grow bigger than iberia as the spanish government does not allow it, even if iberia express makes more profit than iberia. So iberia pilots thru this decision rule the company and not the shareholders, in which british airways is part of it thru the international airlines group (iag) this same story happened years ago when clickair, which was a low cost budget airline having financial problems, merged with vueling, a catalonian low cost carrier which was functioning well at the time. Both airlines merged into equal parts into the new airline which maintained the name of vueling, that way iberia pilots could control the movement of vueling, in other words they could control salaries. This is the reason why nowadays the prices of airline tickets in vueling are so expensive and have not been able to go down in conclusion iberia express cannot function as a low cost carrier as it is under the control of pilots thru iberia and iberia is not in the hands of iag shareholders. Airfares cannot go down making iberia express more competitive thru the ruling of the actual spanish government, who is on the pilots side and is which is damaging the iag alliance

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