- IAG plans to establish an independent AOC for Level, its long-haul, low-cost carrier, and expand its fleet to eight aircraft by 2026.
- Level's growth aligns with IAG’s strategic aim of boosting Spanish operations' annual profits to over €1.5 billion, supporting a broader operating margin goal.
- IAG is considering additional AOCs for European short-haul flights and exploring opportunities with Air Europa and TAP Air Portugal to solidify its position in Latin America.
Level’s Autonomous Development and Fleet Growth
IAG’s low-cost long-haul carrier, Level, is poised to receive its own Air Operator's Certificate (AOC) and expand its fleet to eight aircraft by 2026. This expansion is part of IAG's strategy to generate annual operating profits exceeding €1.5 billion from its Spanish operations, contributing to the group's medium-term operating margin target of 12-15%. Initially launched in 2017 under Iberia’s AOC, Level's independent AOC signifies IAG’s commitment to efficiency and market responsiveness, with plans to extend operations beyond Barcelona.The carrier currently operates five A330-200s, with plans to increase the fleet by 2026. Level serves various destinations in the USA, Argentina, and Chile, and its 2023 capacity will surpass pre-COVID levels by approximately one-third. Iberia CEO Fernando Candela highlights Level's success and profitability, emphasizing its strategic positioning within IAG’s extensive network in Barcelona, aided by feed from Vueling’s short-haul operations.
Expanding Operations and Future Plans
IAG had expanded Level's operations to Paris Orly and Austria with short-haul flights before the pandemic. However, these expansions were scaled back due to COVID-19 impacts. Now, IAG CEO Luis Gallego reveals plans to establish another AOC for European short-haul flights, building on the lessons learned from the past Austrian operation. This move is part of IAG’s flexible strategy, pending the completion of its Air Europa deal, after which the group will evaluate its brand and AOC requirements.Level's growth and the potential integration of Air Europa are key components of IAG’s ambition to develop its Spanish business segment. This strategy, however, does not currently include Air Europa in its profit projections. IAG sees significant growth potential with the arrival of new aircraft like the A350 and A321XLR, particularly in the Latin American market.
Strengthening Latin American Routes and Market Opportunities
Iberia’s Candela notes the advantages brought by the A350, citing increased efficiency and market share in the post-COVID recovery. The upcoming A321XLR will enable Iberia to expand in Latin America without requiring additional widebodies, allowing for new destinations and increased frequencies. This growth will combine organic expansion, partnerships, and the acquisition of Air Europa.IAG’s interest in Air Europa, intensified after regulatory challenges with LATAM Airlines, aims to enhance Madrid as a key hub. Similarly, the potential opportunity with TAP Air Portugal, especially for the Brazilian market, aligns with IAG’s strategy of creating a dual-hub system in the Iberian Peninsula for flights to Latin America, mirroring its North Atlantic operations through Dublin and London.
