Walsh will reveal Aer Lingus plans in autumn
Published 01/08/2015 | 02:30
The €1.36bn sale of Aer Lingus to IAG is all but complete, with just over 62pc of shares in the Irish airline having been pledged to the takeover deal.
Ryanair has indicated that it won't be formally accepting the takeover deal until the middle of August. The airline, headed by Michael O'Leary, missed a Thursday deadline that had been imposed by IAG for acceptances to be received.
That forced IAG, headed by Willie Walsh, to extend its offer deadline one final time, to August 18 at 1pm.
Mr Walsh also intends to update investors in November on IAG's detailed plans for Aer Lingus. IAG, which owns British Airways as well as Spanish airlines Iberia and Vueling, released very strong second-quarter results yesterday, beating forecasts.
Operating profits in the period jumped 40pc to €530m, ahead of the market expectation of €494m. The increase was helped by cost-cutting measures.
IAG left its full-year forecast unchanged, and expects to make in excess of a €2.2bn profit in the 12-month period. It made €1.4bn last year.
The airline group also confirmed the extension of its offer for Aer Lingus to August 18, and said declared the bid unconditional as to acceptances.
"There will be no further extension of the offer unless the offer has become wholly unconditional at that time and date," it said.
IAG is buying Aer Lingus to take a bigger slice of transatlantic traffic between Europe and North America, particularly the United States.
IAG's revenue in the second quarter rose 11.2pc to €5.6bn.
In the second quarter, British Airways made a profit of €453m compared to €332m in the second quarter of 2014. Iberia made a €51m profit, compared to €16m in the second quarter of last year, while Vueling made a €24m profit versus €30m a year earlier, as capacity rose almost 14pc.
"At constant currency, revenue was down 1.2pc, with passenger unit revenue down 6.6pc," noted Mr Walsh. "Non-fuel unit costs were down 6.9pc while fuel unit costs were down 12pc." Mr Walsh said he'll continue to target cost reductions.
"We continue to take cost out of the business, with both employee and supplier unit costs down at constant currency, and improvements in productivity levels," he said.
Aer Lingus is also planning bigger than anticipated cost cuts once the IAG deal is complete. Eighteen months ago, Aer Lingus set a target to achieve annualised savings of €40m by the end of 2016.
"Our ambition is to beat the €40m target independent of an IAG transaction, because we deem it to be necessary," said Mr Kavanagh.
"We're confident we can exceed that €40m. But obviously the opportunity that IAG brings allows us to have far more ambitious targets from a cost reduction perspective."