IAG plans to invest 13.5 billion euros in fleet, operations and customer services
International Airlines Group (IAG), owner of British Airways, Iberia, Vueling, Aer Lingus and Level, plans to invest approximately €13.5 billion between 2024 and 2026 in fleet and operational efficiency improvements as well as customer experience, some €4.5 billion each year.
IAG plans to allocate approximately 8,000 million euros to fleet renewal and 900 million euros to fleet growth, with the aim of increasing capacity in the coming years.
Specifically, the group expects to increase its capacity in 2024 between 6 % and 8 % compared to 2023 and, in the following years, until 2026, between 4 % and 5 %, according to the presentation it sent this Tuesday to the National Securities Market Commission (CNMV) on the occasion of the celebration of its ‘Capital Markets Day’.
This growth in capacity is due to an increase in fleet utilization, as well as the incorporation of new aircraft after the reduction undertaken in the pandemic, the group has detailed.
IAG also projects that investments in information technology will reach 1.7 billion euros in the period and 1.5 billion euros in improving the customer experience.
These investments will be in addition to those the group is already making to reach the target of 10 % SAF (sustainable aviation fuel) utilization by 2030.
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IAG explained to investors that it “will continue to strengthen its leadership positions in the world’s most valuable and growing aviation markets, aiming to achieve sustainable growth through its strong commercial brands, attractive customer base and disciplined approach to capital allocation.”
It has also reiterated its commitment to dividend distributions-which it stopped paying in 2020 due to the impact of Covid-19-once its balance sheet achieves a robust position and its investment plans are advanced.
In this regard, he said he wants to “maximize total shareholder return through profit growth, a regular dividend and additional returns, backed by a strong balance sheet”.
Development of the Spanish business and investment in British Airways
Its strategy for the period 2024-2026 is based on four priorities: the group’s transformation plan, development of the Spanish business, investment in British Airways and growth of the ‘IAG Loyalty’ program.
The group has highlighted that Spanish airlines are reporting very efficient growth, with a focus on Latin America and facilitated by structural improvements such as, for example, the transformation processes of Iberia and Vueling.
IAG wants to further strengthen its leadership in this region and expects its Spanish businesses to report an operating result of more than 1.5 billion euros in the medium term, thus achieving a better balance and a greater diversification of profits in its portfolio.
As for British Airways, it will invest more than £7 billion (about €8 billion) between 2024 and 2026 in its transformation initiatives, including £750 million between 2023 and 2026 in improving its operations efficiency systems and another £100 million between 2024 and 2026 in developing robust operations.
IAG also expects to develop its loyalty program, as it offers high margins, low capital growth and sustainable cash flows, with a profit profile that is less seasonal than that of the airlines.
With information from EFE
Plataforma Informativa de Aviación Comercial con 13 años de trayectoria.