Tuesday 25 October 2016

Aer Lingus could target long-haul routes outside Ireland

Published 07/11/2015 | 02:30

IAG boss Willie Walsh. Photo: Bloomberg
IAG boss Willie Walsh. Photo: Bloomberg

IAG boss Willie Walsh said he hasn't ruled out using both Aer Lingus and Iberia to launch transatlantic services to North America from outside the two airlines' home markets.

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But Mr Walsh, inset, who was speaking at a capital markets day for IAG yesterday, insisted that while the airline group has looked at the possibility, it has no plans to do so yet.

IAG only finalised its €1.36bn acquisition of Aer Lingus a few weeks ago. Aer Lingus has already announced a significant expansion of its US route network for next year, launching services from Dublin to Los Angeles, Newark and Hartford, Connecticut.

Asked if IAG had considered using Aer Lingus or Iberia as low-cost, long-haul options to serve markets beyond their home turf, Mr Walsh said the group has examined the option.

"With Aer Lingus today, and with the continuing transformation that's taking place in Iberia, we have two very cost-effective long-haul platforms, which puts us in a strong position to be able to defend what we currently do, but more importantly also, to look at opportunities," said Mr Walsh. "We haven't ruled out doing something," he added.

Mr Walsh said Aer Lingus chief executive Stephen Kavanagh would argue that he is in a position with the airline's cost base and distribution model that he "could do more" in terms of long-haul "outside of his traditional Dublin-Shannon long-haul market".

"We do have plans and opportunities in place," said Mr Walsh. "However, our view is that there's still a lot that we need to do with core activity, and we'll complete that. But we are looking all the time at how we could utilise that efficiency beyond our traditional market and if it would make sense for us to do that. We've not taken any decision to do it."

Mr Kavanagh told investors that Ryanair is now mimicking much of the services it offers.

"They say imitation is the sincerest form of flattery. Everything that our largest competitor in Dublin is doing continues to flatter us," he said.

IAG also upgraded its medium term forecasts. It expects to deliver annual earnings per share growth of over 12pc between 2016 to 2020, versus a previous forecast of over 10pc.

Irish Independent

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