Aer Lingus boosts IAG to become Europe’s second-biggest airline

IAG has edged past Lufthansa to become Europe’s second-biggest airline last year, spurred by its acquisition of Aer Lingus as strikes held back the German carrier.

Lufthansa’s traffic, a measure of the number of customers carried times the distance flown that’s regarded as an industry standard, gained only 2.7% to 220 billion revenue passenger kilometres, it said yesterday. IAG last week posted a 9.6% advance to 22bn RPKs.

The shift reflects a growth spurt since IAG’s formation in a merger of BA and Spain’s Iberia in 2011 that’s seen the London-based company buy the former British Midland — from Lufthansa — as well as Barcelona-based discounter Vueling and most recently the Irish flag-carrier.

IAG chief executive Willie Walsh pushed through thousands of job cuts at Iberia while using Vueling to combat the challenge of low-cost carriers led by Ryanair.

He has also embraced Gulf rivals, inviting Qatar Airways to join the Oneworld alliance in a move that led it to become a 10% investor.

Lufthansa and Air France-KLM Group, the number one by traffic, are both struggling to deliver a step change in labour costs to match that achieved by Mr Walsh at Iberia and at BA, where he faced down cabin-crew unions during months of walkouts.

IAG is set to close in further this year, since 2015’s figures included only three months of Aer Lingus traffic.

Lufthansa, with its subsidiaries, still leads the European passenger rankings, with 107.7m carried last year, compared with 89.8m at Air France-KLM and 88.3m at IAG.

Lufthansa, where CEO Carsten Spohr is axing unprofitable routes and moving short-haul flights that don’t feed its hubs to low-cost unit Eurowings, suffered its worst-ever strike in November, with 4,700 flights canceled in more than a week of industrial action by flight attendants.

That followed the loss of 3,200 services earlier in 2015 amid strikes by pilots. Some 8,600 services were also lost in 2014.

IAG is easily the biggest of Europe’s three main network airlines by value, with a market capitalisation of €16.4bn, compared with €6.8bn at Lufthansa and €2.3bn at Air France-KLM.

While Air France-KLM remains Europe’s biggest carrier, it barely outperfomed Lufthansa, with a traffic gain limited to 2.8% to 236bn RPKs as it struggled to force through a short-haul restructuring plan that prompted violent clashes with workers.


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