Qatar ups stake in IAG despite ‘challenging’ Q1 for cargo

In the face of what it is calling “challenging market conditions,” IAG Cargo said its commercial revenues for the first quarter of 2016 for 1.5 percent to €262 million, compared to the same Jan.1 to March 31 period last year. While cargo figures were unimpressive, IAG’s overall performance was strong enough for Qatar Airways to increase its investment in IAG from 9.99 percent to nearly 12 percent.

IAG Cargo noted that it had adjusted the prior year’s figures to reflect a directly comparable operation. Without further explanation, IAG said that €20 million previously listed as “other” revenue to has now been recorded as “cargo” revenues in 2015. As a result of this amendment, commercial revenue decreased 8.6 percent versus last year’s adjusted Q1 figures, at constant exchange. Also, IAG Cargo’s volumes were down 1.8 percent, while yields fell 6.9 percent, at constant exchange.

“These are respectable results in the face of a challenging market,” said Drew Crawley, CEO at IAG Cargo. “The trading conditions experienced towards the end of last year have continued into 2016. The industry is also cycling over the west coast port strike that dominated the start of 2015, producing an unusually strong start to last year. Despite this high benchmark, the numbers reported today show that a relentless focus on premium products, strong cost control and precision management of our capacity and yields is helping our business to withstand these headwinds.”

IAG Cargo also noted that it had achieved double-digit growth in tonnages of in its Constant Climate and Prioritise products.

“Our network expansion over the coming months will also be welcome news for our customers as we expand into strong cargo markets,” read a company statement. IAG Cargo said it has announced routes from Madrid into Shanghai and Johannesburg this year, and expects to see addition perishables and pharmaceutical flows via its expansion into the South American destinations of Lima, San Juan and San Jose.

By Q2 of this year, IAG said it expects to see greater integration with Aer Lingus Cargo, possibly adding new routes to its network from Dublin to Hartford, Newark and Los Angeles this year.

Regarding the Qatar/IAG relationship, oneworld alliance partners Qatar and IAG have benefited from the increased connections to North America via IAG’s British Airways subsidiary and to Asian network through Qatar’s routes. Speaking at the recent Arabian Travel Market conference in Dubai, Qatar CEO Akbar Al-Baker called IAG’s 2015 performance “absolutely over-the-moon,” adding that “they’ve already announced record profits and the first quarter was very good.”

European Union rules state that airlines located outside the bloc cannot own more than 49 percent of a European carrier.

IAG’s CEO Willie Walsh, said in February that the Qatar Airways partnership could expand joint purchases, add to code-sharing arrangements and coordinate cargo units.