Varied portfolio offers IAG routes round looming storms

When Willie Walsh, CE of IAG, launched a E1.4b takeover of Aer Lingus last year, the rationale went well beyond securing the Irish carrier’s aircraft and routes. He saw the airline’s strong positions at Dublin and Shannon airports, which have spare capacity, as strong growth opportunities that were lacking at London Heathrow, the congested hub for his British Airways brand. But just over a year on from the acquisition, many of the assumptions underlying the deal have been upturned. European airlines’ growth prospects have been hit by a summer marred by terrorism, air traffic disruption and the economic uncertainty surrounding the UK’s Brexit vote. In addition, the UK government has just approved a new third runway at Heathrow, which Walsh had doubted would ever be built. Now, the question is how much these changes threaten the prosperity of a company that has, so far, negotiated turbulence in the sector better than Lufthansa and Air France-KLM. On Friday, IAG’s shares rose 6% when it announced a relatively muted 3.6% decline in Q3 operating profits. But Chris Tarry, a UK-based aviation consultant, says the group’s fortunes will depend both on its efficiency improvements and on how much buffeting it receives from economic factors such as the UK’s exit from the EU. “It’s not just about improving the businesses that are in the group,” Tarry says. “It’s one of what comes next to the group.”<br/>