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Airlines the world over have been going through torrid times, so it’s no surprise we’ve seen so many rush into each other’s arms to merge, getting protection from consolidation. And after a long 16-month negotiation process, British Airways and Spanish Airline Iberia are finally joining forces, creating a huge multi-million pound airline, a prospect aviation experts are pretty excited by.
“It does make a very very strong airline, one that can, if it plays its cards right, if it gets its service right, if it gives its customers what they want, it can gain a lot of revenue potentially, and of course, there is a cost synergy benefit as well.”
And those synergies or savings, the company said would eventually be 360 million pounds. The two global airlines combined will have more than 400 planes, and their passenger numbers are about the same. But even though British Airways has almost twice as many staff as Iberia, unions said they weren’t worried about job losses.
“I don’t think we have anything to fear about this. I think it could be good positive news, er, for what at the moment seems to be a struggling airline. Nobody wants to see British Airways struggle. We want to see, everybody wants to see is a really good, sound, successful airline.”
However, this deal gives Iberia 45% and British Airways 55% of the company, considerably less than the 65%, the BA boss Willie Walsh wanted earlier in the talks. But his company’s huge losses and pension black hole are thought to have put paid to those ambitions.
But for the customer, this is all about choice of routes. At the moment if you want to travel to North or Central America or the middle of Far East, British Airways is the way to go. But Iberia has Latin America stitched up. So in theory, after the merger, let’s say you want to go from Dubai to Rio de Janeiro, it will be a lot easier for you and a lot more profitable for the company. In fact, BA customers will now have access to 59 new destinations, and Iberia’s will get to fly to 98 new airports. But until this recession is over and the market picks up, the new company is very unlikely to make any profit at all.
Glossary
torrid: a torrid time is a very difficult one
put paid to: to spoil and end your hopes or plans completely
stitch up: to get a deal or agreement completed satisfactorily so that it cannot be changed