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More carriers could fold, warns IAG's Willie Walsh

James Thompson
Tuesday 07 June 2011 00:00 BST
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Willie Walsh, the chief executive of International Airlines Group (IAG), the entity formed by the merger of Iberia and British Airways, warned yesterday that more airlines are likely to collapse in the wake of soaring oil prices.

His comments, at the Iata annual meeting in Singapore yesterday, come after the price of benchmark Brent crude oil jumped as high as $126.59 per barrel earlier this year.

Asked if some airlines could go out of business, Mr Walsh told reporters: "I fully expect that to happen. I think the high oil price is something that poses a real challenge to the industry. There are lots of airlines that will struggle in a high oil-price environment."

A number of airlines fell into administration in 2008 when the oil price hit $147 a barrel.

Mr Walsh said global economic conditions were more robust than three years ago but added that the Americas and Asia-Pacific regions were healthier than Europe. This could make airlines in the region more vulnerable.

He said: "Some will suffer more than others, such as those airlines operating in economies that are weaker. The strength of the global economy is driven by Asia and Latin America to a large degree so airlines operating in those areas will be less affected than airlines operating in a European context. It is likely to have more of an impact in Europe than in other parts of the world."

IAG's fuel bill rose 32 per cent to €1.3bn in the quarter to 31 March. IAG said it raised its forecast for its fuel bill for the year by €100m to €5.2bn.

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