Iberia group

Iberia theme1. Iberia conferenceIberia is Spains largest ambience transport chemical group and the fourth-largest in Europe. It is to a fault the confidential instruction distri scarcelyeline on routes between Europe and Latin America, with the most flights and destinations. And is part of O crudeorld, a globose coalition of leading air lanes.Comp either is in problem from 1927. And is only European airline has posted pro insure from exist 13 socio-economic classs. In 2008 its master(prenominal) activitiesTransport of passengers and cargoAircraft maintenanceHandling work in airportsIt locomote to more than than 118 destinations in 45 countries. But it reaches 189 destinations in more than 70 countries with membership with O overboldorld alliance and code sharing accords with new(prenominal) airlines.Worlds 9th largest aircraft maintenance and engineering firm. In 2008, political party completed deep inspections of1,384 aircraft,208 engines, 30 APU (auxiliary moto rs) and 68,396 comp cardinalnessnts, among other tasks.It offers its service in 41 Spanish airports. And has give-up the ghost of almost 8,500 ground vehicles and employs more than 8,500 muckle. In 2008, it attended 223 airlines,79.9 wholeness thousand millions of passengers and just about 420,000 aircraft, in Spain.In 2008,28.5 million commonwealth chose Iberia or its regional franchise partner for their air travel.1.1. Iberia Sh ar restrainers2. British AirwaysOn 25August1919, BritishAirways forerunner phoner, Aircraft Transport and Travel Limited (ATT), launched the human beingss beginning daily international scheduled air service between capital of the United Kingdom and Paris. They completed its successive 90 years in airline manufacture.British Airways is world leading and flagship carrier of UK. That fly to more than 300 destinations general and company carried 33 million passengers in 2008/09. And it is also member of Oneworld a world(prenominal) alliance of lea ding airlines.Company carried 777,000 tonnes of cargo to destinations in Europe, the Americas and throughout the world. At the end of March 2009 Company had 245 aircraft in service.2.1. HistoryIn 1924, Britains four main fledgling airlines, which had by then evolved into Instone, Handley Page, The Daimler Airway and British Marine Air Navigation Company, immingled to form ImperialAirways Limited. By 1925, ImperialAirways was providing serve to Paris, Brussels, Basle, Cologne and Zurich.In the mid 1930s, a handful of smaller UK air transport companies merged to form the original privately- throwed BritishAirways Limited, which became Imperial Airways principal UK foe on European routes, operating out of another new airport, Gatwick. spare-time activity a government review, ImperialAirways and BritishAirways were nationalised in 1939 to form BritishOverseasAirwaysCorporation (BOAC).In 1972 organisation proclaimed its intention to merge BEA and BOAC to form BritishAirways. The Br itishAirways Group was established, which would eventually result in BOAC and BEA being turn on 31 March 1974 upon the formation of BritishAirways.In 1976 Worlds pathetic gear passenger ultrasonic services were inaugurated simultaneously by BritishAirways to Bahrain (Concorde G-BOAA) and AirFrance to RiodeJaneiro via Dakar. Concorde flights to WashingtonDulles commenced, but problems with noise levels delayed operations to New YorksJFK airport.In 1984 British Airways became PLC. And in 1987 British Airways privatised and completed nuclear fusion reaction with British Caledonian which was financially troubled that time. In 2000 British Airways completed its acqui pution of 9% of the shares in Iberia, at a total of Ptas41 billion (155m).In 2003 British Airways withdrew Concorde, signalling the closure of the worlds only supersonic passenger services. The last scheduled commercial flight was BA2 from JFK operated by G-BOAG.2.2. British Airways Shareholders3. Destinations of Iberia and BA3.1. Iberia Group DestinationsSpain38 DestinationsEurope47DestinationsAfrica9DestinationsAmerica22 Destinations come near and Far atomic number 991DestinationOceania1 Destination measure118 Destinations3.2. BA Group DestinationUK9 DestinationsEurope67Destinations Africa15Destinations America38 Destinations Middle East and South Asia12Destination Asia/Pacific7 DestinationTotal148 Destinations3.3. BA and Iberia dartAeroplaneIberiaBritish AirwaysAirbus A-340/60012Airbus A340/30021Airbus A-3211911Airbus A-3204535Airbus A-3192233Boeing 74755Boeing 77742Boeing 76721Boeing 75715Boeing 73722Avro RJ1009Avro RJ852Total119245 fit to 2009 third quarter report, Iberia operating with 114 Airbus fleet.3.4. Iberia and BA Facts and Figures of 2008 and 2008/09Iberia and BAIberia Financial Year stop on 31 Dec. 2008BA Financial Year Ended on 31 Mar. 2009Non topical addition24508142Current confirming31842346Total asset563410488 honor15641846Noncurrent li skill17654500Current liability2305414 2Total Equity and Liability563410488Revenue52238992Total recognise income/(Expense)(236)(358)Fuel cost16662969Pensions(307) enactment of employees21578449873.5. Iberia and BA Accumulated Facts and Figures of 2009Iberia and BAIberia third Quarter Statement 30 Sep. 09BA 2nd Quarter Statement 30 Sep. 09Noncurrent asset2400.18074Current asset2034.32354Total asset4434.410444Equity1582.52161Noncurrent liability4652Current liability3631Total Equity and Liability10444Revenue3333.04102Total recognise income/(Expense)(181.9)(208)Net Debt(1520.8)(2362)Fuel cost889.61228Pensions(2633)BA has 2 tribute schemes called Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS). That in the olden six calendar months, the sur positive in APS scheme fell from 860m to 27m, while the shortfall in the NAPS scheme ballooned from 1.2bn to 2.7bn.However, Iberia says it can pull out of the deal if BA fails to resolve its pension deficit problem.4. SWOT AnalysisSWOT is strategical analysis impleme nt which help us to scan micro and macro instruction environment of an organisation. Which includes Strength, Weakness, chance and Threats. Where Strength and Weakness is called micro environment factors and Opportunity and Threat is called macro environment factors, in which Strength and Opportunity is stabilizing to achieve company goals and Weakness and Threats is harmful to achieve company goals.5. ponderer Analysis PEST analysis stands for Political, efficient, Socio-culture, and technological and is framework of scanning tool for macro environmental forces of strategic prudence. Which is later extended by level-headed and environmental forces and called by PESTLE. This can help to start new enthronizations or business.Political How Government get involved in business to take shape certain substitute in laws. Political factors which has effects on any organisation or business such as Political Stability, assess Laws, and Labour Laws.Economical Economical factors suc h as economical growth, pastime rate, exchange rate or inflation rate direct study impact on policy making on decision making that how to run business in time to come.Socio-Cultural It includes cultural aspects how people exit behave towards product. Such as substantiallyness consciousness, population rate, religion, or age. expert scientific aspects includes research and development, new uphill technologies. Furthermore it can have put on cost, quality and lead to innovation.Legal factors include discrimination law, consumer law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.Environmental aspects includes Weather, climate or Climate change. It may affect such as tourism and farming. Growing awareness to climate change is affecting companies. It both can create and destroys existing market.6. Iberia6.1. StrengthIberia is Spains largest air transport group and the fourth-largest in Eur ope. And is member of Oneworld, a global alliance of leading airlines. It flies to more than 118 destinations in 45 countries. And have 119 plains fleet.In 2008,28.5 million people choose Iberia or its regional franchise partner for their air travel.Iberia is the first European airline and third in the world best inclined(p) to face the crisis, according to the Top Performing Companies ranking compiled by zephyr Week.6.2. WeaknessIberias cabin crew have just finished one round of strikes and are promising more in a feud over changes to their jobs. BAs attempts to cut cabin crew and freeze pay could also result in strikes. Ground staff and pilots are equally free to use industrial action to get their way.6.3. OpportunityIberia is going for union with BA which would husband them 400 million Euros y proto(prenominal). Increase in applied science is playing important role such as online ticketing, and online regress-in governing body is saving time and cost on operations. On 5 February 2006 the new Terminal 4 at Madrid Barajas was given over to Iberia and the Oneworld alliance members. This renderd much-needed expansion capabilities for Iberia. Iberia is responsible for around 60% of the airports traffic.6.4. ThreatsCredit crunch and increment in fuel prices and global warming are creating threats to airline industry. Because of deferred payment crunch people are foc employ on savings. Cheap airlines emerging which offers good services to travellers and people like to travel with these airlines.Climate change is another factor people are in truth conscious about environment friendly products. And airlines have large(p) contribution in accession of CO2 emission in world.6.5. Political/LegalDuring the dictatorship of Miguel best de Rivera, the aviation companies in Spain were combined and become state- determineled as a general interest public utility, coming into effect in early 1928. The airline was nationalised on 30 September 1944 and became part of INI. In 2001 Iberia erst again privatised and listed on stock exchange.On January 9, 2009 the European Commissions Competition do authorised BA and Iberia merger. 6.6. EconomicalEconomical situation on the populace is not good it creates worst every business specially banking heavens and airline industry. Because aircrafts is expensive mean of travel and people are particularing their direction to saving. Holidays operators such as XL tour operator were filed bank bribe collectible to credit crunch and high fuel prices.Iberia worst hit by credit crunch it post 236 million Euros and 182 million Euros cabbage loss severally in financial year of 2008 and till 3rd quarter 2009. And Iberia and BA are arduous to merger and save more than 400 million Euros per annum from their operations.6.7. Socio-CulturalIberia is flagship carrier of Spain and assumes its tender responsibility by converting hearty action into a priority strategy through projects relating to the access t o the acid of passengers that require any manner of assistance and the giving over of hold space to transport humanitarian aid. During 2008 around EUR 3 million were earmarked for social action projects.It should be noted that Iberia march ons to encourage its nodes to participate in projects of this disposition through the pledges entered into with the Spanish Red Cross and the Special Olympics and to involve its suppliers in social action projects such as the well-established collection of funds during the Christmas Campaign.6.8. TechnologicalIberia has always been among the first to pass on to its customers any changements offered by the new technologies to improve their comfort and save time. Electronic tickets online check in through a simple, procedure on Iberia.com auto check-in machines at the main airports an SMS information service of scheduled times and arrivals of flights via vigorous.Apart from the auto check-in (check-in plus seat reservation) to more than 70 d estinations, other advantages include the possibility of buying shuttle tickets, consulting bookings on any Iberia flight or accessing the Iberia Plus point programme. In 2008 close to 3.5 million boarding cards were issued by using auto check-in online facility. 6.9. EnvironmentalAccording to the Intergovernmental Panel on Climate Change (IPCC), the aviation sector contributes only 2% of the total CO 2 emissions generated by the consumption of fossil fuels.Internal audits were conducted in 2008 to check adequate environmental management in the areas with significant environmental impacts. A total of 39 internal environmental audits were made in Iberia during 2008, entailing the analogous of 42 days work.Iberia currently has a very modern fleet of aircraft. Just in the past five years it has retired 76 aircraft and structured 60 new ones. Which reduce fuel consumptions by 20% compared to early generation aircrafts. Company made 1 million Euros environmental investment. 7. British Airways7.1. StrengthStrength of airline is bringing perfect service in new fleet. And best aircraft have to proffer comfort competent service to customers. take aim of BA operations is amazing and BA gets an advantage on its competitors to provide wider variety of service to travellers.BA has 245 plains of fleet and provides services to 550 destinations around the terra firma with code sharing and as member of Oneworld alliance and in 2008/09 company carried 33 million passengers.BA has its own terminal at capital of the United Kingdom Heathrow Airport which gives them war-ridden advantage to its main competitors such as sodding(a) Atlantic airline.7.2. WeaknessBritish Airways opened officially terminal 5 on 14th march 2008 but the facilities for staff and customers were unorganised. Staff face up problems for car parking that effect the work duties and other side the skilful problems with bag loading in the flights.BA still having problems with missing baggage. According to AEA BA missing baggage ratio is 15.6% per 1000.BA pension schemes is bulky issue for management they post 2.7 billion loss in last financial year for pension scheme. And Iberia SA told them if BA volition not control Pension losses they depart discontinue merger process.7.3. OpportunityBA is going for merger with Iberia SA which would save them 400 million Euros yearly. Increase in technology is playing important role such as online ticketing, and online check-in system is saving time and cost on operations. BA own terminal at Heathrow Airport is helping to change magnitude flights and company is able to provide more relaxed environment. The luxurious lounge has also been well stock with an increase of 20% for customer satisfaction. Around 21 million people used terminal during the year.7.4. ThreatsBA has threats such as unreasonable increase in competition, oil prices, credit crunch, and environmental changing or global warming.BA post 358 million and 208 million engagement l oss respectively in 2008/09 financial year and in second quarter of 2009 due to credit crunch and increase of oil prices.Carbon emission is big issue for airline industry. BA is leading airline in the world and had vitamin C footprint of 17.6 million tons in 2008.So many an(prenominal) other airlines are offering similar products in cheap prices. In UK Virgin Atlantic Airline is main rival for BA which is trying to have its own terminal at Gatwik Airport.7.5. Political/LegalGovernment review, ImperialAirways and BritishAirways were nationalised in 1939 to form BritishOverseasAirwaysCorporation (BOAC).In 1972 Government announced its intention to merge BEA and BOAC to form BritishAirways. The BritishAirways Group was established, which would eventually result in BOAC and BEA being dissolved on 31 March 1974 upon the formation of BritishAirways.In 1984 British Airways became PLC. And in 1987 British Airways privatised and completed merger with British Caledonian which was financiall y troubled that time.On January 9, 2009 the European Commissions Competition Service authorised BA and Iberia merger. 7.6. EconomicalEconomical situation all around the globe is not good. Organisations are having problems with their mo netary resource and people are losing jobs companies are spending less for their survival in this credit crunch. People have not savings to spend on holidays. if people have to travel they are using other sources of transports or other cheap air lines.That is why BA posts a net loss of 358 million and 208 million in current financial year in 2nd quarter. And BA and Iberia are trying to merger and save more than 400 million Euros per annum from their operations.Interest rate is historically low in UK by Bank of England as 0.5%.7.7. Socio-CultureOur Community Learning meaning close to our Waterside headquarters at Heathrow has welcomed nearly 50,000 young people and enceinte learners on a range of education programmes since its opening in 1999. fit years BA Fun Run raised in overmuchness of 55,000 for Cancer Research UK. BITC reported our total direct and in-kind donations for 2008/09 at 5.4 million (2008 5.7 million). Of these, direct charitable donations amounted to 444,000 (2008 398,000).7.8. TechnologyBA does around 57000 surveys every month to get best knowledge what their customers want from them. Almost third of airline booking are now made online. With almost half of all Europe from UK site. Travellers can have access to their bookings or any changes via their mobile phone. They can check-in and also access real time arrival and departure information with online system. System is saving time as well as money of travellers and company.7.9. EnvironmentalClimate change is an issue of spacious importance to us and company have long term lading to address it. Company climate change programme covers four main areas Policy measures to curb emissions growth Voluntary carbon offsetting Fuel efficiency Support for scientifi c researchIn March 2009 company carbon offset scheme became first airline offset product to roleplay the requirements of the UK Governments Quality Assurance Scheme. Company target is reduce company net CO2 emission by 50% by 2050.Meeting this target go away require investment in new technology, sustainable bio-jet fuels and in efficient emissions reductions in other sectors of the economy through the creation of effective global carbon trading markets. Company continue to look for ways to improve fuel efficiency and over 600 projects have so far been assessed. Of these, 55 have been implemented.8. Corporate changesOn July 29, the Board of Directors of Iberia resolved to begin dialogue with British Airways on a potential merger between the two airlines through an exchange of shares. In relation to this transaction, Iberia acquired a strategic self-command interest in the share capital of British Airways in 2008, which delineated 9.99% of British Airways share capital at Decemb er 31. Both companies continue to work on the complex process of negotiating an agreement and planning the transaction.On January 9, 2009 the European Commissions Competition Service authorised this merger. 9. Acquisition and merger jointure is a complete absorption of one company by another, wherein the getting firm retains its identity and the acquired firm ceases to exist as a screen entity.(Ross, Westerfield, and Jordan. 2007)Acquisition is generic term used to describe transfer for ownership. Merger is narrow, technical term for particular legal procedure that may or may not follow an acquisition. (Reed and Lajoux. 1999)9.1. Merger of Iberia and BAThe proposed merger will result in the creation of a new holding company (TopCo) that will own both the existing airlines and whose shareholders will be the current British Airways and Iberia shareholders. Under the terms of the proposed merger, British Airways shareholders will receive one new fair share in TopCo for every existi ng British Airways ordinary share held by them and Iberia shareholders will receive 1.0205 new ordinary shares for every existing Iberia ordinary share held by them. On the hindquarters of this exchange ratio, and after cancellation of the treasury shares held by Iberia and prior to the cancellation of the cross-shareholdings held by British Airways and Iberia in each other, British Airways shareholders will hold 55 per centime of TopCo and Iberia shareholders will hold 45 per cent.Iberia or TopCo will not provide any guarantee or use any cash or credit facilities to fund theBA pension schemes. Merger is anticipate to be completed in late 2010.9.2. Benefits of Merger The combined firm would have 419 aircraft flying to 205 destinations, and strengthen the Oneworld alliance. British Airways customers will gain access to up to 59 new destinations, of which 13 will be in Latin America, while Iberias customers will gain up to 98 new destinations across the British Airways internet. They will also be offered better frequencies and connections, more competitive prices, access to more VIP lounges and enhanced frequent flyer benefits BA and Iberia said it would save them a total of 400m Euros ($594m 358m) in costs a year. The new group will combine the two companies leading positions in the UK and Spain and enhance their strong presence in the international long hooking markets, while retaining the individual brands and current operations of each airline. Enhanced customer benefits with a larger combined network for passengers and cargo and continued investment in new customer products and services. Highly complementary network fit worldwide, in particular combining British Airways strong presence in North America, Asia-Pacific and Africa with Iberias strong Latin American presence. Greater potential for future growth by optimising the dual hubs of London and Madrid. Enhanced scale and ability to compete with other major airlines and participate in future industr y consolidation. Annual synergies of approximately 400m at budgeted exchange rates are expected by the end of the fifth year after the completion of the merger at cash cost of up to 350m. The synergies will be incremental to the existing value from the airlines joint business between the UK and Spain. Approximately one third of the synergies are expected to be revenue related (joint selling, network and revenue management benefits) with the balance coming from cost synergies in areas such as IT, fleet, maintenance and back office functions. Strong group management team to maximize the combined groups earnings potential and deliver synergy benefits while maintaining localised operational focus and accountability.10. Stake Holders BA chief operating officer Willie Walsh said This is good news for BA, our customers and our shareholders we recognize we have strong brands and these will be retained. Iberia CEO Vazquez, who will become chairman of TopCo, said The merger expected synergie s should help both carriers return to profitability. This project represents a very significant potential benefit for the stakeholders of both companies. Steve Turner, Unite national officer for civil aviation, said We need assurances from the outset from British Airways and Iberia that compulsory redundancies will be avoided and that the new airline will be the best in the business in terms of passenger service. It is imperative that both companies sit down as soon as possible with the unions here and in Spain to discuss how jobs and standards can be safeguarded. The main pilots union has given the agreement a cautious welcome, with the warning to act further that the announce analogy between the two airlines must be real. Spanish cabin crew, who are currently involved in strike action, have demanded that two plus two equals four in terms of