00:00Luis on the 8th and the 8th of May you talked about raising prices. You talked about the fact that
00:04you're going to have to do that because of fuel. What's the update since then. What impact of those those
00:10price rises having. What are you seeing in the market. OK so we presented the results for the first quarter
00:16very strong results. After that we have the situation in Iran. Since then we have been following the demand very
00:23carefully but the demand continues very strong premium demand.
00:29Continues in the same way it was before. So it's true that fuel prices are high and we are trying
00:37to translate that to the first. You're trying to. Are you able to do that. OK we can do it
00:44in some markets depending on the markets depending on the different airlines. But yes when 25 percent of your costs
00:51are fueled and now even more than that more than 30 percent of your costs are fueled.
00:57Then you need to increase the first in order to. Are there some markets you can't raise prices. It's more
01:03difficult in some places where you have less premium traffic or for example where you have low cost carriers. Yeah.
01:09It's more difficult to translate that to the first. Right. In terms of what happens next. Do you continue with
01:16that. Do you expect any pushback on fares. Are you seeing any impact in terms of corporate travel. Is there
01:22any sort of slowdown.
01:22Is it having an effect in terms of pockets of demand. What we see now for the Q3 is in
01:29line with what we thought we're going to have. We are analyzing continuously because we think that with this high
01:36fuel environment at some point maybe we can have an impact on demand. But for the time being we don't
01:40see it. Are you surprised by that.
01:41We are surprised. But it's true that before this situation we knew that there is a lack of capacity in
01:51the market and a very strong demand. So I think we have that imbalance that is helping.
01:59In terms of kind of therefore what happens next. Do you see that continuing through the winter. Some of the
02:08demand picture is fairly strong. Does that translate once we get into September October. Does that demand continue. I give
02:15prices stay where they are now in terms of fuel. Are you going to have to make more capacity changes
02:19when it comes to the end of the summer.
02:21We don't know now. We don't know now to be honest. The visibility we have now for the last quarter
02:24is very reduced. We are people booking later. No not really. I think some people they had some concerns because
02:32the noise of the fuel supply. Yeah. We have explained that we don't have any problem with the fuel supply
02:37for the summer season and even after the summer season. I think the good thing is all the job we
02:44did previously with a self supply for example in London. So we don't see problems in Spain. We don't see
02:49problems.
02:50Problems in London and Ireland. So the situation is OK. So I think we are going to analyze the demand
02:56for the last quarter. The idea is if it's not needed we will not adjust the program. If there is
03:03a further spike in fuel prices. I do start to consolidate within the group. Do you need to fly parallel
03:09flights to New York out of Madrid out of London out of Dublin. Is there a way within the group
03:14that you can you can rationalize some of the capacity that you have. But we don't do it in that
03:19way because
03:20of our model every airline takes decisions about where they fly. So I don't see that. I can see that
03:27more in the different airlines happening. But you. So how would you manage capacity. It would be on an individual
03:34airline basis. Yes. We do it airline by airline. We don't do it from the group. It's something that is
03:39different in our model. So when we operate to one market for example we have a common approach.
03:44Yeah. But the VA decides where they fly and the capacity that they put or Iberia or Aer Lingus or
03:51Wellington. OK.
03:52In terms of what you're seeing on Asia. Are you seeing a pickup because of the problems that the Gulf
03:58carriers are having. I spoke to a number of the Gulf carriers that they're saying they're back to kind of
04:02mid 80s load factors.
04:04They're seeing quite strong demand. Are you continuing to see Asian demand remaining strong though as a result of what
04:10we're seeing in Iran.
04:11Yeah. I think we are taking advantage in some routes that now the people they cannot fly through the Middle
04:18East. Yeah. We put more capacity to some destinations from London in Asia.
04:24But I think it's something that is going to be is going to finish soon. I think as soon as
04:29the Gulf carriers. So it's not structural. No I don't think so. No. I think some of them they are
04:34flying now 80 percent of the capacity they were flying previously.
04:37Yeah. And I think we are not going to have a structural change. Do you see a price war out
04:41to Asia. Do you think the Gulf carriers need to do that. They're already signaling they're kind of OK.
04:47Do you think they're going to need to manage prices. I suppose they will try to stimulate demand prices too
04:53that they can have.
04:53Absolutely. When we get to the end of the summer. There's a possibility that a number of airlines are going
04:58to be struggling. Yes. Do you see an opportunity for M&A coming up.
05:03We always say that this crisis can't help to consolidation because we started this in a very good position with
05:12a very strong balance sheet 15 percent of margin.
05:17So with the catching. Others they don't have all that. So at the end they are going to have problems.
05:24And what we want after this crisis is to be stronger to show again that
05:29the resilient is IAG. And I am sure we can have opportunities. And we are going to be there. Any
05:34targets you're looking at any areas that you're looking at. Would it be domestic Europe.
05:36What kind of where were you looking. No I think you know that we tried for example to do the
05:42Europe operation before.
05:43It was not possible because of the competition European competition. And I think now Europe they are trying to change
05:52the approach to consolidation.
05:53Maybe that that can open the door again. It's going to be easier to consolidate in Europe you think going
05:58forward. I think they realize that after the
06:00Draghi report that we need to be more competitive. We are not today. So I think if they have a
06:07different approach maybe some operations that were not possible
06:10before can be possible now. Any ideas of what that could look like. No I think.
06:16Come on Luis. There's got some names out there. What's on your shopping list. We always have a department following
06:22opportunities.
06:23International Airlines Group is a platform for consolidation. So it's our role to try to find out who can join
06:30the group. If we can improve the
06:33performance of that company with a model that we have. And there are airlines in Europe that could fit that
06:38bill. Yes.
06:39And I think a lot of airlines also they would like to belong to IAG because of our model that
06:46the different airlines they have their
06:48brands, the customers, the network that we said before. So it's a model that is attractive.
06:54OK. Let's just talk one specific company and that is EasyJet. There's obviously a lot of speculation around what happens
06:59with
06:59EasyJet. Castle Lake the private equity firm has indicated or been it has been indicated that they might be interested
07:05in that. The
07:06understanding is that you would need a partner for that. Could any of the major groups within Europe partner with
07:14them to
07:15make that happen? Like how logistically do you see that? Could that work? To be honest I don't want to
07:21comment about
07:21bits of others but maybe there is an opportunity to. Would you be interested in bits of EasyJet? It's something
07:31that we are not
07:33considering now. Right. I think. But maybe in the future. You never know. Do you think the market is undervaluing
07:40assets like that?
07:41EasyJet has great slots and good airports has slots with Airbus which are quite attractive as well. Do you think
07:48the market is properly
07:49valuing some of those assets at the moment? Probably. Yes. But again I think consolidation is needed in Europe in
07:57order to be more
07:57competitive. You see what happened in the States. We need here in Europe something similar. So if we can have
08:06the
08:06opportunity we will explore it. OK. One final quick question. One of the big debates here is what has happened
08:12with the
08:12engine manufacturers. You have Rolls-Royce engines. Are you happy with Rolls right now? Or are you not happy with
08:19Rolls right now?
08:19That seems to be the debate at the moment. Happy or not happy? Are you happy or not? It's not
08:23so binary. I think the
08:25situation is improving with all the manufacturers not only Rolls. We are working with them in order to improve the
08:33situation because it's true that we had a very difficult situation after Covid. Now with Rolls for example last year
08:40we
08:40have several 787 grounded in BA. We don't have any more. So we are working well but still we need
08:48to improve the
08:48collaboration.
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