KAL007
Topic Author
Posts: 36
Joined: Mon Sep 01, 2003 1:26 pm

BA 'may Merge With Iberia'

Mon Oct 06, 2003 2:03 am

BBC NEWS
Sunday, 5 October, 2003
http://news.bbc.co.uk/2/hi/business/3165488.stm


British Airways chief executive Rod Eddington has indicated that the British carrier could well merge with Spain's Iberia.
Mr Eddington's comments come in the Spanish press after he has been in Madrid at a dinner hosted by the Spanish airline.


According to an interview in El Pais newspaper, Mr Eddington said the two flagship airlines may "finish in each other's arms".

Mr Eddington added that Spain was a strategic market for Britain and it was natural for the two airlines to work together.

Speculation of a tie-up between the two airlines has been growing after Air France effectively took-over Dutch KLM earlier this week.

The Air France-KLM structure - where the two airlines are brought together under a joint holding company but keep their separate identities - "could be a good formula" for British Airways, Mr Eddington told the Spanish business magazine Expansion.


COMPLICATIONS

The Air France-KLM deal creates Europe's largest airline, putting pressure on BA to follow suit with a merger in order to maintain its cost efficiency and market position.

Iberia and British Airways have already signed so-called code-sharing agreements on 57 routes which allows each airline to sell tickets to fill seats on the other airline's flights.

But full-scale mergers are more tricky to negotiate because of bilateral agreements made between individual governments and third countries which dictate where airlines can fly.

The European Commission is currently negotiating to replace all these bilateral transatlantic agreements with a single pan-European deal, and analysts expect more mergers once these rules are modified.


PRIDE

"Regulation norms still complicate many things...and we would have to know what kind of union would be meaningful for two companies like BA and Iberia to work together," Mr Eddington said.

There have been some question marks over whether the KLM-Air France deal will actually save a significant amount of money because the two airlines are forced to operate independently.

The struggling airline industry has long been expected to undergo consolidation, with too many airlines competing for too few tickets.

But the process has been delayed by a variety of factors, including the national pride associated with having a flagship carrier as well as the long-established rules over flight paths.

---------------------------------------------------------------------------

QUESTION:

What are the implications of this merger (if green lighted) along with the recent one w/Air France/KLM/perhaps Alitalia) mean for the future of the European aviation industry ?

I would like to hear different views from the diversified members of this community  Smile/happy/getting dizzy.

Cheers,

KAL007


[Edited 2003-10-05 19:04:21]
i never knew who i was. i never knew who i wanted to be. -KAL007-
 
flyboyaz
Posts: 2077
Joined: Sat Sep 13, 2003 11:32 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 2:08 am

All I can say is....here we go again.....merger madness just like we saw in the mid to late 80's.
Catch a ride on a smile!
 
DoorsToManual
Posts: 1453
Joined: Sat Apr 19, 2003 12:28 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 2:11 am

I don't think we are going to get any merger between IB & BA until the US & EU successfully conclude their present round of talks on a new air service agreement (next meeting on Dec 8th). I'm pessimistic about the outcome given the EU has a long wish list which US negotiators have already signalled might not be approved by Congress (ownership rules, for instance).

If they do successfully conclude talks and a new agreement is put in place, you can wave bye-bye to national airlines...we'll see something more like "Trans European airlines"....if it's good for the consumer (which economists think it is) then I'll be happy.
 
luv2fly
Posts: 11056
Joined: Tue May 13, 2003 2:57 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 2:22 am

I think what we are now seeing in Europe is the mergers we saw here in the states years ago! Tho one a different scale as the airlines will be one tho keep the separate names, KL and AF. Is it the popularity and strength the LCC's now have that is prompting this, or the airline industry as a whole, to many airlines chasing to few pax?
You can cut the irony with a knife
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 3:25 am

This would seem to be a rational response by BA and IB. They (and indeed virtually all of AF and KL's competitors) now face a changed competitive environment after the merger. I think the following article in this week's economist does a very nice job framing the issues:

http://www.economist.com/displaystory.cfm?story_id=2099875
 
donder10
Posts: 6944
Joined: Sun Oct 21, 2001 5:29 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 3:31 am

I suspect both OA+TP will die pretty quickly die once the industry is properly liberalised.
Great article though and I couldn't agree more,DoorsToManual!
 
copaair737
Posts: 3571
Joined: Sat Aug 30, 2003 5:00 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 3:40 am

maybe with the AF/KL marriage, we will see more. AZ would probably hook up with AF/KL, BA/IB/EI may hook up, and SAS/LH/Austrian/Spanair could hook up, leaving some carriers in the dark, OA and TAP come to mind.

-Copa
Livin' on Reds, Vitamin C, and Cocaine
 
Stratofish
Posts: 1034
Joined: Mon Sep 24, 2001 6:38 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 6:19 am

"I suspect both OA+TP will die pretty quickly die once the industry is properly liberalised."

That´s one of the many reasons why I strongly oppose a liberalised (airline) market.
I just hope all this merger madness will open up chances for new independent carriers.


Stratofish
The Metro might be the Sub(optimal)way
 
Jacques60
Posts: 117
Joined: Thu Jul 17, 2003 1:34 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 7:28 am

At least one thing is sure : LHR and MAD hubs will not be linked soon by a high speed train ?
 
bobrayner
Posts: 2038
Joined: Sun Apr 27, 2003 8:03 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 7:48 am

At least one thing is sure : LHR and MAD hubs will not be linked soon by a high speed train ?

Well, if you really want to transfer by HST... in a decade it should be possible, changing trains twice; at Stratford / Waterloo / Ebbsfleet, and Paris.
(It's possible now but it takes almost as long as walking)

 Big grin
Cunning linguist
 
Ant72LBA
Posts: 374
Joined: Thu Jul 31, 2003 7:42 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 7:56 am

BBC Ceefax is reporting that BA "may consider" a merger with AA if the KLM/AF merger gets the go-ahead. The story isn't being carried on the website, so I'm not sure where this has orginated from, anyone any ideas?
 
N79969
Posts: 6605
Joined: Tue Jan 29, 2002 1:43 am

RE: BA 'may Merge With Iberia'

Mon Oct 06, 2003 9:06 am

Here you go:

http://biz.yahoo.com/rc/031005/airlines_ba_1.html

These guys are really anticipating revolutionary changes coming from the EU-US negotiation.

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