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The International Air Group (IAG) owns four main airlines in addition to their Cargo strategic business unit (SBU) and Avios.  The four main airlines are British Airways (BA), Iberia (they also have Iberia express), Vueling and now Aer Lingus. Having so many companies under one parent group, such as IAG, can make the accounts complicated but it also offers opportunities to gain efficiencies across the SBUs.

One way in which IAG are offering support to all their airlines is to find value by harmonising the fleet across the four airlines. IAG have created a single specification for Airbus A320 and A350 and this will be used for BA, Iberia, Vueling and Are Lingus. The ability to have a stronger bargaining position in procurement means they can reduce maintenance and inventory holding. In addition, this type of procurement contract results in aircraft to be moved across the group, with little additional costs.

Management accounting is fundamentally about seeking ways to profit maximise or for companies who are not profit oriented to find the most cost effective way of providing their product or service. The structure of a company can help to seek these efficiencies and profits but creating bargaining power with suppliers.

Source: Annual Report IAG 2015