David Prosser: BA can no longer fly solo
Friday 13 November 2009
Outlook It has been two years in the making, but the British Airways merger with Iberia finally seems to have been cleared for take-off. Thank goodness for that. After a disastrous year, BA is in desperate need of some good news – the £500m of annual cost savings that analysts believe the Iberia deal could deliver certainly fit the bill.
Nor is this arrangement purely about synergies. The two airlines have clear opportunities, given their remarkably complementary set of routes, with BA strong on North Atlantic travel and connections in Asia, and Iberia dominant in flights from Europe to South America.
Still, there are risks. For example, The Independent's travel editor, Simon Calder, warns that Iberia is perceived as a much less service-oriented carrier than BA, which might cause reputational damage at the latter. And there's the prospect of another interminable competition inquiry before the deal gets green-lit by Europe's regulators.
But BA – and Iberia, for that matter – have no choice. BA's steady progress towards a closer partnership with American has its merits, but what both these airlines need is a full-blooded deal with a rival of scale. And for both parties, no one else fits the bill.
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