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British Airways eyes more mergers

Stephen Beard Sep 6, 2010
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British Airways eyes more mergers

Stephen Beard Sep 6, 2010
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TEXT OF INTERVIEW

JEREMY HOBSON: Consolidation looks like it will continue in the airline industry. You’ve probably heard about the United-Continental merger that was given the green light by the Justice Department. And just a few months ago, British Airways agreed to takeover the Spanish carrier Iberia. Well now, British Airways says it plans to go on a merger binge. And for more on this binge, we’re joined live from London by Marketplace’s Stephen Beard. Good morning, Stephen.

STEPHEN BEARD: Hello Jeremy.

HOBSON: Well any idea on who British Airways has its eye on?

BEARD: Not really. I mean, BA says it had a list of 40 possible targets. It’s whittled that down to 12, but it won’t say exactly which 12. Analysts here speculate it may include American, which it has an alliance with. And Qantas. But above all, carriers in the fast-growing, emerging markets like China and India.

HOBSON: A ha. Now, Stephen, airlines aren’t the first companies that I think of when I think of companies that are flush with cash. Can British Airways afford to do this now?

BEARD: Well Laurie Price, an aviation analyst with consulting firm Mott MacDonald, says BA can’t afford not to merge.

LAURIE PRICE: If BA is to continue to grow, develop, and dare I say it, even survive, it is going to have to form part of a much larger grouping. The industry is going to have to consolidate. You’ve got too many airlines chasing too little traffic.

But this won’t be a cakewalk for BA. The real prize would be undoubtedly merging with a successful carrier in a fast-growing market like China or India. But why should such an emerging carrier — if I can put it that way — want to be swallowed up by this lumbering great, western airline. Analysts say Chinese or Indian carriers might be better of merging with small, dynamic airlines in their own backyard.

HOBSON: OK. Marketplace’s Stephen Beard in London. Thanks, Stephen.

BEARD: OK Jeremy.

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