LONDON – British Airways has taken the first step towards the creation of a transatlantic powerhouse carrier via a proposed all-share merger with Spain’s Iberia to create a European airline with more than £13bn of annual sales.
Telegraph.co.uk said the two carriers are expected to make an antitrust application within weeks for a three-way tie-up with American Airlines – though US aviation ownership rules would restrict the trio to a revenue-sharing deal.
Willie Walsh, BA chief executive, said: “This creates a very strong third European airline, which will give us a platform for further consolidation. I see this as the start not the end of consolidation.”
He added that he had “spoken with Gerard Arpey”, the American Airlines boss, “and he has welcomed the [Iberia] move and thought it was positive”.
BA’s proposed merger with Iberia would be structured along similar lines as Air France’s tie-up with KLM and Lufthansa’s takeover of Swiss, with the two companies retaining their brands and national identities, partly to maintain existing flying rights.
Damian Reece, head of business, telegraph.co.uk said, “The combination makes sense on paper. Initial estimates based on the experience of the Air France-KLM merger suggests revenue and cost synergies of up to £200m – handy extra cash when you’re staring at the prospect of mounting losses.
“It would also create a new European power capable of entering transatlantic talks with American Airlines (BA’s ultimate goal) on a more equal footing.
“A British Airways, American Airlines, Iberia axis has the nucleus for a truly global airline once Open Skies and US anti-trust regulations allow,†Reece addd.
