International Airlines Group: Flying high, but could do better
As temperatures plummet and nights get ever longer, residents of the frozen north could be forgiven for thinking that a couple of weeks in Cape Town might be just what’s needed to revive the spirits. However, a glimpse at the British Airways (BA) website at what the airline is charging for the trip over the festive season would be enough to send the hardiest of travellers dashing off in search of some stiff liquid fortification.
So it might come as little surprise that BA’s parent company, International Airlines Group (IAG), has announced a record quarterly operating profit for the three months to the end of September of £1.7bn, notching up a margin of 20% despite labour costs being 14% higher than in 2023.
Demand for transatlantic travel was particularly strong, and a recovering business market saw the lucrative premium cabins ever fuller. BA has announced plans for a £7bn overhaul after criticism that its cabins, and indeed its cabin staff, were looking a little long in the tooth, and IAG has launched a €350m share buyback scheme.
However, all this depends on getting planes in the air, which is proving to be something of an issue given the long-running maintenance issues with the Rolls-Royce engines on its fleet of Dreamliners.
BA has been forced into a swathe of flight cancellations due to the number of Dreamliners that are grounded while waiting for maintenance by Rolls-Royce, which in turn is blaming a shortage of spare parts for the backlog. None of this will be much consolation for customers without flights, and Rolls-Royce claims that finding a solution is its “top priority”.
S4 Capital: Bad man falls on bad times
The past year hasn’t been all beer and skittles for S4 Capital, the marketing group set up by Sir Martin Sorrell after his sharp exit from WPP in 2018.
The company has been forced to issue its second profit warning in less than two months, and the share price dropped a further 15% as it announced revenue down 19.3% in the third quarter, which it attributed to technology clients continuing to cut back on marketing in the face of “challenging global macroeconomic conditions and high interest rates”.
Sir Martin has long been a divisive figure, dating back to the 33 years he spent transforming WPP from a manufacturer of wire for supermarkets into one of the world’s biggest marketing and communications groups.
Striding around the world like a pint-sized colossus, he achieved hostile takeovers of agencies of the calibre of J Walter Thompson and Ogilvy & Mather, the latter prompting group chair David Ogilvy to describe him in public as “an odious little shit”.
So there was no shortage of schadenfreude when he resigned from WPP after allegations emerged of routine verbal abuse of underlings and a blurring of lines between personal and company expenditure, not to mention the incident where a couple of employees enjoying a drink after work were surprised to spot Sir Martin popping in to a house of ill repute in Shepherd Market.
S4 has promised to cut costs, including a significant headcount reduction to reflect the revenue environment, and it has managed to acquire new clients such as Marriott, Burger King and General Motors, as well as developing an AI product to automate workflows in marketing.
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