check this out
BA sets sights on Swissair
By Jason Nisse
24 September 2000
British Airways is to pursue another merger in Europe after the failure of its £3.1bn deal with KLM. Swissair, Switzerland's largest airline, is understood to be the main target.
Ron Eddington, the Australian chief executive of BA, is understood to want to force the pace of European consolidation as the way of stemming the losses that BA is haemorrhaging on the Continent.
Its number one target is Swissair, that's owned by SAirGroup. Last month SAirGroup produced a report which, while not published, became common knowledge in the air travel industry. It concluded that a merger between Swissair and BA would be a much better fit than a BA-KLM deal, as there would not be the regulatory problems of Swissair losing lucrative transatlantic routes, an issue KLM would have faced if taken over by BA.
Also Swissair has a higher proportion of business passengers than KLM, fitting in with the sort of business that BA would like to develop. BA recently launched beds in its club class long-haul flights and an economy plus service for business travellers.
Swissair currently has no direct relationship with BA. It runs its own alliance of airlines, called Qualiflyer, while BA is part of a grouping called OneWorld. BA also has a 10 per cent stake in Iberia, the Spanish airline.
Swissair has not commented on speculation that BA could be interested in a deal, but admitted that its name is often mentioned in conjunction with a BA merger.
A BA spokesman said the group was concentrating on its business and was not about to rush into any other merger discussions.
However, other sources close to BA said that Mr Eddington is concerned that if BA does not strike an alliance in Europe that allows its to cut costs substantially, it may find it difficult turning its Continental losses into profits.
The merger with KLM would have created the world's third largest airline but fell apart over the issue of the amount of control that would have been exercised by Mr Eddington.
The collapse of the deal is an embarrassment to the Australian who only took over at BA in May, following the sudden departure of his predecessor, Bob Ayling.
Under Mr Ayling, BA pursued an alliance with American Airlines that fell foul of regulators on both sides of the Atlantic.