British Airways guarda a SAS, Finnair, TAP, BMI, Aer Lingus per lo "shopping"
Walsh picks out five rivals ‘in play’
By Jeremy Lemer
Published: November 3 2010 17:31 | Last updated: November 3 2010 17:31
The head of British Airways has identified five European carriers that are likely to come up for sale in the next few years as industry consolidation continues in the world’s second largest aviation market.
Speaking at an investor conference in New York, Willie Walsh, the chief executive of British Airways, highlighted SAS Group, Finnair, Aer Lingus, TAP Portugal and BMI (part of Lufthansa), as airlines that could be “in play” in the near future.
Lufthansa recently expressed an interest in SAS of Sweden.
The airlines, which are spread throughout Europe and have revenues ranging from a few hundred million euros to about €5bn, have all struggled to break even during the downturn and face significant competitive pressures.
BA has long considered itself as a potential consolidator in Europe – earlier this year the company finally inked a merger with Iberia of Spain – but Mr Walsh was careful to say that he was only interested in BMI for certain.
“There will be opportunities for further consolidation,” he said. “Not all of these airlines would be attractive to us. Some of them would make sense in a BA context some would make sense in an IAG [the holding company for the merged BA and Iberia] context.”
Still, the comments will focus speculation that BA plans to make further mergers and acquisitions a core part of its strategy. In September Mr Walsh said that he had drawn up a list of 12 candidates to buy or merge with after completing the Iberia deal.
For airlines recovering from a run of crippling oil prices in 2008 and then the global recession in 2009, consolidation has become the strategy of choice, promising greater scale and financial strength in an increasingly competitive international market place.
Continental Airlines and United Airlines, both of the US, agreed to merge in May in a deal that created the world’s largest carrier. Meanwhile Lan of Chile and Tam of Brazil proposed a tie-up in August that would reshape the Latin American market.
Mr Walsh said that BMI would make sense for his company, because of the extensive portfolio of landing slots the company holds at Heathrow airport. “If Lufthansa [BMI’s parent company] are looking to sell BMI we would be interested in acquiring it.”
The BA chief executive added that the holding structure that he had established with Iberia was “scalable” and designed to allow further acquisitions to be made even where political considerations might require that the target retain its own brand.
Earlier this week, BA reported record second quarter operating profits and a pre-tax profit of £158m for the six months to the end of September, suggesting it was finally on the recovery track after two long years of losses.
But analysts will be keen to see the benefits of the BA-Iberia before giving their blessing to further consolidation. And the results of those airlines that have joined forces so far have been mixed.
Delta Air Lines, which merged with Northwest Airlines in 2008, has performed little better than its peers when measured on operating margins excluding the impact of fuel – a key industry measure - according to research by JP Morgan.
Indeed for the moment Mr Walsh said that BA would play a passive role for now.
“We are not intending to do anything [but] we have had … lots of phone calls from companies who are looking for a partner,” he said. “So there is no question that consolidation will continue within the industry.”
Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
Financial Times
http://www.ft.com/cms/s/0/5723fb7e-e76a-11df-b5b4-00144feab49a.html
Walsh picks out five rivals ‘in play’
By Jeremy Lemer
Published: November 3 2010 17:31 | Last updated: November 3 2010 17:31
The head of British Airways has identified five European carriers that are likely to come up for sale in the next few years as industry consolidation continues in the world’s second largest aviation market.
Speaking at an investor conference in New York, Willie Walsh, the chief executive of British Airways, highlighted SAS Group, Finnair, Aer Lingus, TAP Portugal and BMI (part of Lufthansa), as airlines that could be “in play” in the near future.
Lufthansa recently expressed an interest in SAS of Sweden.
The airlines, which are spread throughout Europe and have revenues ranging from a few hundred million euros to about €5bn, have all struggled to break even during the downturn and face significant competitive pressures.
BA has long considered itself as a potential consolidator in Europe – earlier this year the company finally inked a merger with Iberia of Spain – but Mr Walsh was careful to say that he was only interested in BMI for certain.
“There will be opportunities for further consolidation,” he said. “Not all of these airlines would be attractive to us. Some of them would make sense in a BA context some would make sense in an IAG [the holding company for the merged BA and Iberia] context.”
Still, the comments will focus speculation that BA plans to make further mergers and acquisitions a core part of its strategy. In September Mr Walsh said that he had drawn up a list of 12 candidates to buy or merge with after completing the Iberia deal.
For airlines recovering from a run of crippling oil prices in 2008 and then the global recession in 2009, consolidation has become the strategy of choice, promising greater scale and financial strength in an increasingly competitive international market place.
Continental Airlines and United Airlines, both of the US, agreed to merge in May in a deal that created the world’s largest carrier. Meanwhile Lan of Chile and Tam of Brazil proposed a tie-up in August that would reshape the Latin American market.
Mr Walsh said that BMI would make sense for his company, because of the extensive portfolio of landing slots the company holds at Heathrow airport. “If Lufthansa [BMI’s parent company] are looking to sell BMI we would be interested in acquiring it.”
The BA chief executive added that the holding structure that he had established with Iberia was “scalable” and designed to allow further acquisitions to be made even where political considerations might require that the target retain its own brand.
Earlier this week, BA reported record second quarter operating profits and a pre-tax profit of £158m for the six months to the end of September, suggesting it was finally on the recovery track after two long years of losses.
But analysts will be keen to see the benefits of the BA-Iberia before giving their blessing to further consolidation. And the results of those airlines that have joined forces so far have been mixed.
Delta Air Lines, which merged with Northwest Airlines in 2008, has performed little better than its peers when measured on operating margins excluding the impact of fuel – a key industry measure - according to research by JP Morgan.
Indeed for the moment Mr Walsh said that BA would play a passive role for now.
“We are not intending to do anything [but] we have had … lots of phone calls from companies who are looking for a partner,” he said. “So there is no question that consolidation will continue within the industry.”
Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
Financial Times
http://www.ft.com/cms/s/0/5723fb7e-e76a-11df-b5b4-00144feab49a.html
