Contributor - Europe

Cathy Buyck

International Airlines Group (IAG) CEO Willie Walsh hit out again at Airbus over continued delays of the A321neoLR and revealed the company is in “very, very constructive" talks with Boeing to bring deliveries of its first 737 Max jets forward&nbsp;one year, to 2022. IAG at the Paris Air Show signed a letter of intent—subject to formal agreement—for 200 Boeing 737-8 and 737-10 originally for deliveries between 2023 and 2027. Speaking during IAG’s second-quarter results presentation with analysts Friday, Walsh said the group is “looking to see if we can get some of the deliveries in 2022. The engagement with Boeing is very constructive and positive.” IAG’s Maxes would be powered by CFM Leap engines and be used by a number of the group’s airlines, including its two low-cost carriers Vueling and LEVEL, plus British Airways at London Gatwick airport.

 


In a hint that the Max order was not solely opportunistic and driven by the likely low prices for the grounded jet offered by the embattled U.S. OEM, Walsh stressed that the group’s recent aircraft orders “including the LOI with Boeing are absolutely consistent” with the IAG 2018-2023 fleet plan disclosed at its capital markets day in November. “There are still outstanding aircraft to be decided on,” he said, emphasizing that “we are pleased so far with what we have ordered.” Besides the Max deal, recent orders include 18 General Electric GE9X engine-powered Boeing 777-9s, plus 24 options, for British Airways and eight Airbus A321XLRs for Iberia and six for Aer Lingus, plus 14 options.

 


Despite being pleased with the order for Airbus's newest longer-range narrowbody, Walsh reiterated he is “disappointed” with the performance of the aircraft manufacturer and its “very poor delivery from [the Airbus final assembly line in] Hamburg of the A321.” IAG’s Irish subsidiary <a href="https://www.ainonline.com/aviation-news/air-transport/2019-07-29/aer-lingus-adds-first-eight-airbus-a321lrs">Aer Lingus took delivery of its first of eight A321neoLR jetliners</a>&nbsp;at the end of July, several months later than scheduled. IAG is not the only airline that is excited about taking the LR and then being disappointed about the ongoing delivery delays, insisted Walsh, who labeled these delays as “unacceptable. We need Airbus to improve their performance and work on that very quickly.”

 


<a href="https://www.ainonline.com/aviation-news/air-transport/2019-07-31/tariffs-brexit-threaten-airbus-a321-acf-challenge-persists">Airbus CEO Guillaume Faury earlier this week</a> acknowledged the continued “challenges and difficulties” associated with the ramp-up of the production of the Airbus Cabin Flex (ACF) version of the A321neo—the new configuration of the variant that supports also the LR—owing mainly to what he called the “complexity” of the aircraft. The A321 ramp-up is limited also because of the change of mix, with more demand for A321 than A320s, and resulting bottlenecks in the supply chain, according to the Airbus boss.

 


IAG posted a €960 million operating profit after exceptional items in the second quarter, up 6.7 percent on the year-ago period, which Walsh described as a “good performance” despite fuel headwinds. “This highlights, once again, that our unique structure and diverse brand portfolio underpins our financial resilience and ability to deliver robust results,” he said. With a £761 million operating profit, British Airways remained by far the largest contributor to the group’s earnings. Aer Lingus achieved the highest operating margin, of 18.4 percent, among all IAG airline subsidiaries while Barcelona-based LCC Vueling reported the only year-on-year increase in operating margin, with 1.2 percentage points to 10.1 percent for the April-June quarter. The group is sticking to its plans to temper full-year capacity growth to 5 percent, down from an initially planned 5.3 percent hike in terms of available seat kilometers.

 


In the first half, IAG added 21 new-generation aircraft, 14 A320 neos, four A321neos, and three A350s.

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