IAG Announces Bid to Acquire Spain-Based Vueling

International Airlines Group (IAG), the parent company of British Airways and Iberia, has announced that it has made an offer to acquire a 100 percent stake in Vueling, the Spain based low cost carrier.

The company currently owns a 45.85 percent stake in Vueling and has made an offer to acquire the rest of the stock for €113 million, for an offer price of €7 per share.

IAG chief executive officer, Willie Walsh, said, ‘With its leading position in Barcelona, European growth strategy and low cost base, Vueling has much to offer IAG. It has significantly increased capacity while remaining profitable, despite the Spanish economic slowdown, and already has extensive commercial arrangements with Iberia. We would plan to retain the current Vueling management team.

This would be good news for Vueling as there are many advantages for the airline in this deal. It will benefit from the financial strength of a larger airline group, making it better able to compete with other airlines and invest in new customer products and services. The airline will also be able to generate some cost and revenue synergies as part of IAG mainly through joint financing and procurement.

This acquisition would be positive for Spain. We would retain Vueling’s Barcelona base and create new Spanish jobs.’

Veloz Holdco SLU, a wholly owned subsidiary of IAG, has made the acquisition offer.

Earlier, IAG had reported a 2012 third quarter operating profit of €270 million, compared to €363 million reported for the same period in 2011. Passenger unit revenue has increased by 9.1 percent for the 2012 third quarter.

Survey Indicates Business Travellers Keen to Explore

A recent survey has concluded that business travellers hope to have time to explore the local area when on a business trip.

Around 48 percent of business travellers like to explore the neighbourhood around their hotels while on business trips, while 47 percent wished that they had more time to explore.

The survey, conducted by the Hotel Indigo brand, also reported that around 21 percent of business travellers are willing to forego their business remuneration for extra time to explore the local region, while around 29 percent are willing to compromise on sleep to do so.

Mary Dogan Winslow, the director for Americas Brand Management for Hotel Indigo, said, ‘At Hotel Indigo, we want our guests to feel refreshed and inspired by the things they discover about our neighbourhoods. Guests booking the ‘It’s Not All Business’ package can start and end the day in an inspiring way, with one of our local favourites.

When the workday is done, business travellers often feel stuck in their hotel rooms, but we encourage them to discover something new. They don’t just check in to our hotels; they check in to the neighbourhood.’

The Hotel Indigo’s ‘It’s Not All Business’ package includes a complimentary breakfast and a signature drink to unwind at night. The hotel dining venues offer seasonal menu choices, including local coffee and beer.

The brand currently owns eight hotels in the UK, including properties in Birmingham, Edinburgh, Glasgow, Liverpool, Newcastle, and three properties in London.

There are around 11 Hotel Indigo in the pipeline in Europe, while worldwide there are 46 Hotel Indigo hotels already running, and 52 in the development pipeline.

The brand is claimed to be popular in Europe as it offers a flexible approach for developers to redesign an existing or acquired hotel as a Hotel Indigo property, with less of an investment requirement and a quicker return to operation. For guests, the brand offers signature services as well as the attributes of a boutique hotel.

Former UK Transport Secretary Says New Hub Airport Could Prove Too Costly

With London Heathrow airport operating at around 96 percent of its capacity, the UK authorities are looking at a proposed new hub airport to be located close to the Thames River estuary.

However, according to the UK’s former transport secretary, Lord Adonis, the proposal for the project planned by architects, Foster & Partners, is likely to cost double the current valuation of £50 billion.

At the recently concluded session of the World Travel Market in London, Lord Adonis said, ‘I would be surprised if we were not talking about £100 billion-plus because it would involve a second Thames barrier and a new high-speed link to London.

To rule out expansion at Heathrow would be barmy and could undercut the role of the Davies Commission. Never has one public policy issue been so analysed. Six or 12 months would have been ample, instead of three years that has been given to Davies.’

In a new development, the World Travel & Tourism Council (WTTC), a global tourism association, reported that tourism in the UK is worth around GBP63 billion, and its growth is being affected by the lack of airport capacity in the south-east of the nation. WTTC is offering its support to the concept of a single airport hub for London, connected to a broader transport network.

WTTC president, David Scowsill, said, ‘The UK Government welcomes tourists with one hand while holding up a ‘keep out’ sign with another.

UK visa policies are overly bureaucratic and cumbersome; UK Air Passenger Duty is the highest of any country in the world; yet it is the incessant delay in providing new airport capacity, which is by far the biggest problem facing tourism in the UK.

The Davies Commission will take too long to review the position.

The private sector stakeholders of the tourism industry stand ready to be the earnest partner in delivering on solutions.

The UK government should grasp the nettle and make a decision that will bring jobs and economic growth at a crucial time for the UK economy.’

Monarch Airlines announces new development at Birmingham Airport

Monarch Airlines, a UK-based airline with its main headquarters at London Luton Airport, has announced major construction work at Birmingham Airport in the West Midlands.

The airline has said that it will create up to 300 jobs at Birmingham Airport with the development of a new hangar and engineering facility that is large enough to accommodate two Boeing 777-300ER aircraft, or ten narrow body aircraft. It has also said that there is the likelihood of the project creating a further 150 jobs at a later stage.

The company currently has five bases at airports in the UK, and operates flights from Manchester, Birmingham, London Luton, Gatwick, East Midlands and, from March 23, 2013, it will have a sixth base with the commencement of operations at Leeds Bradford. The East Midland operation is also a recent addition to the company’s operational base, with the company stepping in to operate some of the routes previously flown by Bmibaby, which ceased its operations at the airport when the company closed on September 9, 2012.

Monarch offers cheap and last minute flights to destinations in the Mediterranean, the Canary Islands, Cyprus, Egypt, Greece and Turkey, and offers charter services to Europe, the Caribbean, India, Africa and the United States.

Since the company commenced operations in April 1968, it has grown its workforce to a present day level of around 3,000 employees, and carried approximately 5.9 million passengers in 2011.

Monarch Airlines intends its new hangar at Birmingham Airport to be finished and operational by the end of 2013.

Flybe Reports Loss Due to Low Demand in UK Domestic Traffic

Flybe, a UK-based airline company, has reported a loss for the six months ended September 2012, due to fall in UK domestic traffic.

The airline has reported a pre-tax loss of £1.3 million for the six months ended September 2012, compared to a profit of £14.3 million for the same period in the preceding year.

Flybe chief executive officer, Jim French, said, ‘Our performance for the six months to 30 September 2012 has been in line with the revised expectations set out in our Interim Management Statement of August 2012.

The continuing challenges of the UK domestic aviation market further validate the importance of our decision to focus Flybe’s long-term strategy on rebalancing our route network by growing our European operations.

I am delighted to report that Flybe Finland, our joint venture with Finnair, has continued its impressive trajectory of growth, with an additional 12 E-series jets now transferred from Finnair into Flybe Finland on a contract-flying basis.

Finnair is delighted with this relationship, which they have publicly stated has enabled them to reduce their overall costs significantly. I am encouraged by the continuing dialogue that Flybe Europe’s management team are having with other parties seeking similar arrangements.

The UK domestic aviation market continues to show little sign of recovery, with the market trending a year-on-year decline. Since this represents c75 percent of Flybe UK’s passenger base, this decline continues to pose challenges on our UK business.

Flybe UK maintained its market leading brand position with a 29.1 percent share of the UK domestic market and 52.6 percent of the regional UK market. Forward passenger sales revenue for winter 2012/13 at 6 November 2012 is ahead by c2.5 percent year-on-year and our proactive approach on capacity management means seats flown for the winter period will be about 1 percent to 2 percent down against the previous year. We are also working on a range of cost saving initiatives over the next 12 months, targeting an annual saving of £2 per seat.

APD (Air Passenger Duty) continues to be a burden to the industry and one that impacts disproportionately on Flybe compared to those with significant operations outside of the UK. We are actively lobbying for some changes in this area although we recognise this will be a long-term project.

While we recognise the current challenges being faced across the Group, we are addressing those challenges and believe that our long term strategy is one which will continue to rebalance our Group activities. We remain confident in Flybe’s future prospects.’