IAG shareholders have given the go-ahead for investment in the renewal of the short-haul fleet, with the acquisition of 50 B737 aircraft from Boeing and 37 A320neo aircraft from Airbus. The transaction was approved at an extraordinary shareholders’ meeting in Madrid, where only 37.9% of the capital was represented.
The CEO of the holding company that includes British Airways, Iberia, Vueling and Aer Lingus, Luis Gallego, has ruled out the need for a new capital increase to tackle this project. The order, signed with the manufacturers between May and July this year, has a list price value of 11.1 billion euros, on which IAG claims to have obtained significant discounts that it must keep secret due to contract requirements.
IAG went for a macro capital increase in October 2020, when the pandemic was hitting hard, to weather the economic impact of the collapse in traffic. Shareholders then paid 2.741 billion euros to prevent the group’s airlines from having to resort to public bailouts and open up capital to their governments. The backing then was massive. Today, various minority shareholders have expressed concern about the need to recapitalise the holding company and also about the evolution of the share price.
“During the pandemic, we took the decision to delay the renewal of our short-haul fleet to preserve our cash flow and protect our balance sheet. Now, with recovery underway and solid operating cash flow, it is the right time to invest again and meet our goal of renewing 60% of our short haul fleet by the end of the decade,” the CEO described.
The incoming aircraft will reduce operating costs by “between 10% and 20%”, said Luis Gallego during his speech, describing the new Boeing and Airbus aircraft as the most efficient in the market.