The International Consolidated Airlines Grp SA (LON: IAG) share price has risen 50% in the past two months after bottoming in early October. However, the shares have started trading sideways as the bullish momentum wanes, and many are now asking what comes next for the airline group.
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In an exclusive interview with Sam Chui, an airline industry reporter, IAG CEO Luis Gallego outlines the airline group’s overall strategy in the various markets in which it operates. Gallego also detailed the critical focus areas for each of its airlines and the synergies and opportunities it was keen to exploit.
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IAG’s CEO insisted that the group wanted to strengthen its presence in key markets, such as Latin America and North America. For example, the firm is trying to acquire Air Europa to boost the size of its Madrid hub to compete effectively with other leading hubs in Northern Europe.
The company also operates low-cost carriers (LCCs), Vueling and LEVEL. Vueling is an LCC that operates short-haul flights within Europe, while LEVEL operates long-haul flights from its base in Barcelona.
IAG is keen to grow its LCC given the significant opportunity in this market, but the CEO mentioned that its airlines are facing multiple significant headlines. Firstly, AIG’s LCCs must compete with much larger LCCs with more considerable cost efficiencies and can outprice them.
The airline group is also facing other challenges, including inflation as supplier costs rise, rising employee costs, and slightly lower passenger numbers compared to 2019. Another significant cost headwind is the airline group’s push to make its operations sustainable.
The CEO reiterated IAG’s goal of drastically reducing CO2 emissions by 20250 through a multi-pronged strategy. For example, the airline group is investing in new aircraft and has ordered 50 Boeing 737 and 59 Airbus A320neo family aircraft, which should help reduce CO2 emissions by 20% since they use the latest technologies.
IAG is also investing in Sustainable Aviation Fuel (SAF) to power its planes and expects the new fuels to reduce its CO2 emissions by 30% by 2050 by enuring that 60% of the fuel used by its planes is SAF.
Lastly, the CEO noted that demand for flights remained stable despite the UK, EU and US economies staring at a possible recession next year. Gallego remained hopeful about IAG’s prospects.
*This is not investment advice.
IAG share price.
The IAG share price has risen 50.22% from its October low of 90.45p to its current price of 135.87p.
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