IAG Merger Fuels New Fleet Renewal Strategy for Iberia and British Airways

 - May 9, 2011, 7:37 AM
IAG plans to combine the aircraft acquisition philosophies of British Airways and Iberia in its approach to fleet renewal. (Photo: Newscast/British Airways)

The tie-up between Spanish flag carrier Iberia and the UK’s British Airways to create International Airlines Group (IAG) will pave the way for an overhaul of the way the pair buy aircraft, according to the new company’s finance chief. The two airlines plan to combine buying in a new fleet renewal strategy led by IAG with its stronger buying power, although they will continue to run and maintain their fleets separately, Enrique Dupuy said.

Dupuy, previously Iberia’s finance boss, said the move may mean BA will swap traditional aircraft purchasing for the leasing approach Iberia has used for most of its aircraft, or Iberia will use BA’s approach, depending on the type of aircraft.

IAG has kicked off the new strategy with its first order, for eight Airbus A330-300 jets to replace up to 16 of Iberia’s long-haul A340 aircraft. Dupuy said Iberia had most of its long-haul fleet on operational leases and might speed returns of its A340-300s, whose leases expire in the next six to seven years. Leases on short-haul jets such as Boeing 737s or Airbus A320s typically tend to last five to eight years, while longer-haul aircraft carry leases ranging between 10 to 12 years.

“We’re trying to get the best practice out of the different cultures of each company,” said Dupuy. “If we find there are some specific aircraft we have to finance on a more flexible basis, we will use Iberia’s experience, but if we feel more comfortable owning them, then we’ll use the more traditional ownership structure BA has used.”

The merger has brought the 112-strong fleet of Iberia together with BA’s 240 aircraft. IAG plans to prioritize replacement of Iberia’s fleet, which includes 18 twelve-year-old A340-300s and 17 A340-600s, which are four-and-a-half years old.

IAG plans to use the flexibility offered by Iberia’s leases to replace existing aircraft before concentrating on new aircraft such as the Airbus A350 and the Boeing 787. BA has ordered 787s and Airbus A380s. IAG expects delivery of the new A330s in autumn 2012.

An IAG spokeswoman said the airline had picked the A330s for “fleet commonality” reasons, allowing it to maintain the aircraft alongside Iberia’s other Airbus jets. She refused to elaborate on fleet expansion plans, although the A330 order represented an “interim” measure and the company would consider all options for future orders, including other manufacturers such as Boeing.