IAG will buy 120 new aircraft for the Barcelona-based airline Vueling

Barcelona (ACN).- The airline group formed by British Airways and Iberia, IAG, announced this week it will buy up to 220 new Airbus 320 between 2015 and 2020, 120 of which will be for the recently-purchased Catalan company Vueling. IAG’s CEO, Willie Walsh, stated that these purchases will allow Vueling to continue with its market expansion. IAG bought the Barcelona-based airline last spring and the operation was authorised in July by the competition authorities. For the last few years, Vueling has been one of the few profitable airlines in Europe, with a business model that evolved from being a low-cost airline but offering business services and flying to the main airports in Europe. In fact, the company links Barcelona El Prat with 104 destinations (in Europe, the Middle-East, Russia and Africa) and it has operation bases in Madrid, Paris and Amsterdam, among other main airports. Last July, Vueling increased its number of transported passengers by 17.8% on July 2012 figures, transporting a total of 2.05 million people in the 7^th month of the year. In addition, its number of flights grew by 13.1%, with a total of 14,078 flights in July (in July 2012 Vueling flew 12,447 flights). In addition, Vueling reached a flight occupancy rate of 82.1%, 1.8% more than in the same period of last year. In 2012, the company obtained a net profit of €30 million. In addition, 35% of all passengers of Barcelona’s El Prat airport fly will Vueling.

Vueling currently has a fleet of 70 aircrafts

IAG is decided to prioritise Vueling, keeping the brand and an independent structure within the giant airline group. For this reason, IAG will allocate up to 120 new airlines to the Barcelona-based airline between 2015 and 2020. The planes will be to cover short and mid-distance flights and the model chosen will be within the Airbus 320 family. Currently, Vueling runs a fleet of 70 Airbus airplanes: 66 are A-320 with a capacity of 180 passengers and 4 are A-319, with a capacity of 144 passengers.

IAG’s purchase, to be authorised by the shareholders

In fact, IAG will buy up to 220 A-320, in order to replace its old planes and to allow the group’s expansion, particularly Vueling’s, as was explained on Thursday by IAG’ CEO, Willie Walsh. Initially the airline giant will buy 62 new aircrafts for Vueling but up to 58 additional ones could be purchased as well. The remaining 100 planes that IAG will buy could be finally used by British Airways, Iberia or even Vueling. The purchase of the flights is conditioned to the approval of the general shareholder meeting, which will take place before the end of the year.

Strengthening Vueling’s expansion

Willie Walsh stated that Vueling “has managed to successfully expand its business in a profitable way, focusing both on growing markets and on those areas where weak competitors are reducing their capacity”. According to Walsh, the new planes will allow Vueling to continue with this expansion and to replace part of its old fleet with more modern aircrafts, which are more efficient in terms of fuel consumption. This will allow the company to reduce its cost per unit and therefore improve its profitability.

Vueling’s CEO will become the airline’s new President

Despite having been bought by IAG, Vueling will continue to operate with its own brand. In addition, the former CEO of the Catalan company, Àlex Cruz, will now occupy the Executive Presidency position of the airline. He will replace Josep Piqué, who used to be Spanish Industry and Foreign Affairs Minister before becoming Vueling’s President. Piqué was chairing the airline since 2007 and under his watch the company started to become profitable and was significantly expanded. In addition, the seven members of Vueling’s Board will all abandon their positions in the coming days. A new structure will be created to run Vueling, adapted to the fact that it will no longer be traded on the stock exchange market. However, IAG confirmed that the new structure will be chaired by Àlex Cruz, with executive responsibilities.