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INTERNATIONAL CONSOLIDATED AIRLINES GROUP, S.A.

(IAG)
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Delayed Quote. Delayed London Stock Exchange - 12/06 11:35:09 am
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International Consolidated Airlines S A : UK regulator caps Heathrow fee-raising plan but airlines still furious

10/19/2021 | 02:36am EST
FILE PHOTO: A worker sanitises a barrier at the International arrivals area of Terminal 5 in London's  Heathrow Airport

* CAA proposes Heathrow charge of up to 34.40 pounds per passenger

* Heathrow had wanted to charge up to 43 pounds

* Airlines say they will oppose the price rises

* Airport says regulator should safeguard investor return

* Proposals will be finalized next year

LONDON, Oct 19 (Reuters) - The UK aviation regulator said Britain's biggest airport Heathrow will not be permitted to raise passenger charges by as much as it had wanted, but airlines opposed the scale of the hike as the hub and carriers battle to recover pandemic-linked losses.

COVID-19 has restricted flying for more than 18 months, placing huge financial strains on Heathrow and airlines like its biggest user, British Airways, and putting airport charges at the center of a bitter row.

Airlines on Tuesday criticized the UK's Civil Aviation Authority's (CAA) initial proposals for Heathrow to be allowed to charge as much as 50% more per passenger over the 2022-2027 period.

Heathrow had wanted to almost double charges at the top end of its request.

Airlines UK, the country's industry body, said it would oppose the CAA's proposals "in the strongest terms."

"It’s Heathrow’s shareholders and not our customers who should be asked to foot the bill," the group said in a statement.

Heathrow wants to be able to charge more to help recover pandemic losses of $4 billion, but airlines, who have also lost billions, don't want to have to raise ticket prices to cover higher airport charges just as they are trying to stimulate demand.

British Airways, owned by IAG, and UK-based competitor Virgin Atlantic, say that Heathrow is already the most expensive airport in the world and that they would oppose the proposals in the coming consultations with the regulator.

"The disproportionate increase compared to other European hubs will undermine its (Heathrow's) competitiveness even further and UK consumers will be losing out," IAG boss Luis Gallego said.

The CAA said its proposals, which will be finalized next year, struck the right balance between protecting consumers and allowing the airport to continue to invest.

Heathrow is owned by investors including Spain's Ferrovial , the Qatar Investment Authority and China Investment Corp.

Responding to the proposals, Heathrow said that the regulator should safeguard a "fair return" for its investors.

"The settlement is not designed to shield airlines from legitimate cost increases or the impacts of fewer people traveling," an airport spokesman said.

Under the CAA proposals, Heathrow could raise its per passenger charge to between 24.50 pounds and 34.40 pounds ($33.76-$47.41). Heathrow had requested that the cap be set at 32 to 43 pounds. In 2020, the charge was 22 pounds.

There would be no additional adjustment to Heathrow's regulatory asset base, something which Heathrow had requested, said the CAA, outlining plans for introducing a new risk sharing mechanism to prevent either the airport or the consumer bearing all the risk of future uncertainty. ($1 = 0.8587 euros) ($1 = 0.7256 pounds) (Reporting by Sarah Young; editing by Kate Holton, Jason Neely and Bernadette Baum)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
FERROVIAL, S.A. 1.54% 25.79 Delayed Quote.14.12%
INTERNATIONAL CONSOLIDATED AIRLINES GROUP, S.A. 8.08% 142.34 Delayed Quote.-17.58%
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Financials
Sales 2021 8 273 M 9 339 M 9 339 M
Net income 2021 -3 180 M -3 590 M -3 590 M
Net Debt 2021 13 196 M 14 897 M 14 897 M
P/E ratio 2021 -2,85x
Yield 2021 -
Capitalization 8 299 M 9 358 M 9 369 M
EV / Sales 2021 2,60x
EV / Sales 2022 1,10x
Nbr of Employees 50 813
Free-Float 74,5%
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International Consolidated Airlines Group, S.A. Technical Analysis Chart | IAG | ES0177542018 | MarketScreener
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Mean consensus OUTPERFORM
Number of Analysts 18
Last Close Price 1,67 €
Average target price 2,48 €
Spread / Average Target 48,4%
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Managers and Directors
Luís Gallego Martín Chief Executive Officer & Executive Director
Stephen William Lawrence Gunning Chief Financial Officer
Javier Ferrán Larraz Chairman
John Gibbs Chief Information Officer
Alberto Miguel Terol Esteban Senior Independent Director
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