Iberia and BA to merge
According to an interview I caught on BBC Radio, British Airways (BA) and Iberia of Spain are in talks for a possible merger. This would create the world’s third largest airline, and open the way for future mergers within the airline industry.
This is not a new romance story, since 2003 there have been rumors of a possible merger between BA and Iberia, following the merger of Air France and KLM, only this time there isn’t as much opposition to the merger deal as the Economist reminds us, back then Caja Madrid went ahead and bought a stake in Iberia to prevent BA from taking over.
hen AF and KLM merged. In fact this time round many airlines are facing higher fuel costs and their profits are decreasing every quarter. For many this is the only way out of these difficult times, and even Spain’s minister of Economy has said that the merger is a good thing for Spain.
But what is the bottom line?
In Europe this won’t mean much, except maybe less competition on
routes like BCN - LHR, or MAD - LHR
but it will mean better routes for example from MAD - JFK or LHR -
GIG/MEX/EZE (South America)
On the other hand, they already had code-share agreements, so I don’t
really think it will mean much difference in prices for the ticket
prices, what it will mean is a reduction in staff on both companies,
restructuring of some flight schedules, better management of fleet and
lowering the costs of jet fuel acquisition, hopefully higher standards
of baggage handling by Iberia :D
In the end, there’s room for maybe 4 or 5 big airlines in Europe and
maybe 4 low-cost ones.
Lufthansa
AF/KLM (alitalia?)
BA/Iberia
SAS
??
Swiss, Austrian and TAP will most likely be bought by Lufthansa
Finnair will be bought by BA/Iberia?
Aeroflot and Turkish are too peripheral (imho) to become big players in Europe.
If Alitalia won’t merge with AF/KLM I have no idea what will happen to them…
Ryanair
Easyjet
Air Berlin
Wizzair with…???
Vueling with…???
SkyEurope will have to merge with Wizzair or with someone else to
consolidate the market in that region.
Vueling and ClickAir (Iberia) already are talking about cooperation,
although it would be interesting to see Vueling take on southern
europe’s low cost market by association with some Italian lowcost and
a base in Milan (when Alitalia leaves the hub)
That basically covers the whole market for lowcosts, the others will
disappear, there might be room for a true lowcost in the scandinavian,
baltic market (Air baltic IS NOT a lowcost, imho)
anyway, in the end it all depends on the price of oil.