Aer Lingus has 'bolstered' IAG as Walsh dismisses Brexit threat
Published 17/06/2016 | 02:30
Aer Lingus is helping to bolster IAG's ambition to become a leader on the transatlantic market, IAG chief executive Willie Walsh told shareholders at the company's annual general meeting in Madrid.
And he also insisted that a possible Brexit will have no material, long-term impact on the airline group.
Mr Walsh said that integration of Aer Lingus has gone well, and that the airline is in a "really strong position" to grow from its Dublin hub.
IAG acquired Aer Lingus last year for €1.36bn and has since expanded its transatlantic services from Dublin. Mr Walsh told IAG shareholders that Aer Lingus is a "profitable, well-run company with a strong brand, resilient business model and a low cost base".
"Leadership in the transatlantic market has always been a key goal for IAG. Aer Lingus will help bolster our ambition.
"It is blessed with a geographic advantage, a strong brand... and US preclearance for immigration and customs at both Dublin and Shannon."
This year, Aer Lingus has relaunched its service from Dublin to Los Angeles and will also relaunch its route from the capital to Newark in New Jersey.
Later this year it will commence its route between Dublin and Hartford, Connecticut.
It's expected that Aer Lingus will later this year announce another new route to the United States.
A planned €320m runway development at Dublin Airport will help IAG's transatlantic ambition out of Ireland.
But Mr Walsh has previously warned that Aer Lingus is close to its limit in terms of the transatlantic expansion it can offer out of Dublin until overall infrastructure at the airport, including taxiways and stands, is improved.
The new runway is slated to be complete by 2020, with initial pre-construction work set to start later this year.
At IAG's agm, chairman Antonio Vasquez also said that Aer Lingus is "allowing us to grow in our core markets".
IAG, which also owns British Airways, Iberia and Vueling, posted a record €2.3bn operating profit last year, helped by lower fuel costs.
But Mr Walsh warned yesterday that oil prices will eventually rise again.
"It was a year of extreme volatility in both the oil and currency markets," he said.
"While the oil price declined, sharp increases in the value of the US dollar, the currency we use to buy fuel, meant some of the cost benefit was offset.
"No one believes that the oil price will remain at low levels long term. And with volatility likely to remain, we continue to hedge fuel to give us time to manage any uncertainty."
The chief executive also said that IAG has undertaken a risk assessment of a possible Brexit and said the group does not believe it will have any major impact on the company. "IAG believes that the aviation industry and consumers in Europe, including the UK, have benefited from free trade within a common aviation area," he told shareholders.
"As a responsible business, we've undertaken a risk assessment and at this stage have concluded that should Britain vote to leave the EU, this will not have a long-term, material impact on our business."
He added: "IAG has taken business, not a political view on the referendum.
"We believe it is a decision for the British electorate and we're not going to advise people about how they should vote."