BA joins forces to form cost-cutting 'e-hub'

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The Independent Online

British Airways is joining forces with five other airlines to start an internet marketplace to handle around $32bn (£20.2bn) in annual purchasing. The network will cover the procurement of key products and services such as fuel, engines and maintenance services.

The other airlines in the "e-hub" are Air France, American, Continental, Delta and United. Each of the founding airlines will have equity stakes based on the value of their purchasing through the exchange. BA's stake is estimated to be 17 per cent. The network, which has so far not been named, could seek a separate stock market listing, BA said. It estimates that the exchange could yield annual savings for BA of £180m by 2002. This is equivalent to 5 per cent of its annual £3.9bn procurement budget.

BA said other airlines could soon join the new network with talks continuing with an Asian airline and another in Europe.

The new group, which includes six of the world's top 10 airlines, follows the rival scheme announced earlier this month by the Star Alliance.