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Iag Corporate Finance Analysis

2346 words - 10 pages

IAG
INTERNATIONAL AIRLINES GROUP

Corporate finance 2013

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Index
1. Company profile
1. Core activities
2. Competitors
3. External finance
1. Corporate governance
4. Corporate governance
5. Compensation of member of the Board of Directors
6. Investor relation section
2. Stock price data and analysis
7. Daily stock prices
8. Comparison with market and sector indexes
9. Dividends policy
10. Investment magazines reports
11. Five selected new facts
3. Financial information
12. Capital structure
13. Liquidity and solvency ...view middle of the document...

The company developed a network of alliances and joint businesses with companies operating all over the globe such as Malaysia Airlines, American Airlines and Qatar and SriLanka Airlines in order to optimize the network across its two hub airports: London Heathrow and Madrid Barajas.
In 2011, IAG created the Avios, the company’s shared reward currency which increased the corporation’s revenues from partners by 8% over 2011.

1.2 Competitors

IAG competitors are two of the main global market leaders: Air France - KLM and Lufthansa.
With the increase of the company value and the expansion of the market position as their main goal, both companies continually improve customer satisfaction with product and service quality and with the creation of an economically and ecologically sustainable business.
Both Air France - KLM and Lufthansa focus their activities on different business segments such as the passenger transportation (the main source of their revenues) along with cargo transport, aeronautical maintenance (Air France - KLM) and catering and IT services.
In order to extend and consolidate their reach across the countries in which they operate, both companies developed strategic alliances and joint businesses: with its partner Alitalia, Air France - KLM created a unique combination of hubs in northern and southern Europe and with more than 400 subsidiaries and associated companies, Lufthansa has obtained a strong competitive advantage in the world’s global network.
More important, Air France and KLM are members of the SkyTeam alliance  (the second world’s largest alliance, with 19 member airlines) and Lufthansa is one of the founding member of the Star Alliance, the first world’s largest alliance which puts together 27 leading airlines.

1.3 External finance

No capital increase were made in 2012, however, in order to fund its “acquisition of Vueling, enhance liquidity and improve the credit profile of the group” (Willie Walsh, IAG Chief Executive), IAG launched €400 million of senior unsecured convertible bonds, due to mature in 2018, that can be converted into ordinary shares of IAG.
The expectation of the bonds’ conversion price is between 30-35%, with a fixed rate of interest between 1.75-2.5%, payable semi-annual in arrears.
The full conversion of the bonds would increase the number of IAG shares in issue by 5% and the net proceeds from the bonds will be used for the repayment of the loans from British Airways and Banco Santander, responsible for financing the purchase of the Vueling shares.

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2. CORPORATE GOVERNANCE

2.1 Corporate Governance

As stated in the Company's Bylaws, the Board of Directors must comprise a minimum of nine and a maximum of 14 members.
In 2012, the Board consisted of 14 Directors, three Executives, one Proprietary Non-Executive, eight independent Non-Executives and two other External Non –...

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