Aer Lingus owner IAG upgrades long-term guidance

Aer Lingus's parent is not ruling out plans for the Irish airline to offer transatlantic flights from outside Ireland.

International Consolidated Airlines' Group (IAG), which bought Aer Lingus for €1.4 billion in August, upgraded its target for 2016 to 2020 earnings growth to over 12 per cent a year, underlining long-term confidence at a time when rivals are hamstrung by internal issues.

Responding to questions at an investor event on Friday, IAG chief executive, Irishman Willie Walsh, said there was a possibility that both Aer Lingus and one of the group's Spanish carriers, Iberia, could ultimately expand their businesses to offer long-haul flights from bases outside their home countries.

He pointed out that Aer Lingus's existing strong position in the north Atlantic market and Iberia's transformation from a loss-making carrier to a profitable business meant that both had the potential to expand beyond their home markets of Ireland and Spain.

“We have not ruled out doing something like that,” Mr Walsh said. “We are in a position where we could d more in terms of long haul outside their traditional markets. However, our view is that there is still a lot that we plan to do within their core markets.”

Issuing a series of improved financial metrics, IAG said that it would aim for average annual earnings per share growth of over 12 percent, up from the 10 per cent-plus figure previously targeted.

IAG's focus on growing earnings at a portfolio comprising British Airways, Aer Lingus and Spain's Iberia and Vueling, comes as Lufthansa and Air France struggle with strikes and worker opposition to cost cuts.

Lufthansa’s main cabin crew union said a week-long strike would start on Friday. The airline has already been hit by over a dozen pilot strikes in the last 18 months, while Air France has had to lower its sights on cost cuts after negotiations ended with managers fleeing a meeting and scrambling over fences.

IAG's boss Willie Walsh has been praised for managing to cut costs at both British Airways and Iberia since the pair sealed a merger in 2011, acting before its French and German rivals, and making it better able to compete against Gulf carriers on long-haul routes and low-cost airlines like easyJet in Europe.

IAG also announced on Friday that Alex Cruz, current chief executive of Vueling would next year replace Keith Williams as executive chairman of British Airways as Mr Williams retires.

Additional reporting: Reuters