Suit you sir! Who should BA merge with next?Back to Forum
It is being well speculated in the quality press that IAG is closely examining three different mergers (take overs) BMI, TAP and Aer Lingus.
Which one would you chose? Or are you of the view they need to wring the synergies out of the BA and Iberia merger first – besides the price may fall?20 Sep 2011
Anonymous20 Sep 2011
Are any of those three really that likely to merge with IAG? It’s unlikely that LH would let BD slots go without allowing *A carriers to have first refusal and even then the competition commission would want to get involved if BA were looking to buy anything significant at least for the show, after all they allowed BR and DA but in a rather different climate.
I think LH group would attempt to protect TAP if a move was made to keep it in *A because of the coverage of South America where *A is relatively weak.
EI is an interesting one. Notionally if they want to join an alliance again they could benefit from any one of them quite significantly. They do a good job on their shorthaul and knock the spots off the crazy BD offering between LHR-DUB on all fronts. There may be resistance from the establishment in Ireland to a close tie up with BA for all the old reasons.
Maybe a tie up further afield is more called for, perhaps Gulf Air or similar as that would bring strength to an area of weakness. Links need not be eurocentric and within Europe there isn’t now much left that is independent.20 Sep 2011
Of the three cited, in order of importance;
1. Bmi – Essential for growth at LHR, but acquiring slots from an asset disposal would be infinitely cleaner and more straightforward than buying the whole airline.
2. TAP – Strengthens IAG in Latin America and a defensive move against a possible defection by LAN to Star Alliance. Political interference may scupper a deal/make IAG reluctant. Also limited growth at LIS whereas there’s significant scope for organic growth at MAD.
3. Aer Lingus. A nice to have to secure Ireland feed and add to transatlantic presence. Political concerns over maintaining links to Ireland will limit scope to use Aer Lingus slots for other routes.
You are right that the market will want to see evidence of the current merger working before any further deals and there is a lot of nervousness in the market (LH unexpectedly downgraded its forecasts today).
I would say Finnair is most important after bmi to build presence in Asia. Air Berlin is also a potential opportunity to make Oneworld/IAG stronger in Germany.20 Sep 2011
There’s something in this Asia focus which needs more delving; IAG needs a smaller, Asian-based airline in its portfolio.
Or, as Hippo states, a Middle Eastern carrier like beleaguered Gulf Air which was originally British and formerly part-owned by BA forerunner BOAC:
Jetstar would do nicely in Asia.21 Sep 2011
A couple of long shots:
Lufthansa’s stake in JetBlue (a distinct possibility with UA/CO merged and in Star Alliance)
And a stake in the new Qantas Asia airline which, if based at SIN, BA can easily feed.23 Sep 2011
EI is a non-starter. Eire is going through tough times at present so not a vast amount of traffic opportunities. The only benefit that a linkup with EI might bring is if the merged company was then able to run flights from the UK via SNN to the US along the lines of the existing LCY-SNN-JFK routing, but with the option to take on passengers at SNN as well. The Ryanair link though would probably kill any vague benefit.
BMI would only be worthwhile as an asset stripping operation – the LHR slots are worth having. The market could probably handle a reduction in capacity so BMI vanishing might be better off for BA and it’s associates.
TAP is an interesting proposition, particularly when you look at services to South America. A merged TAP/IB operation serving the Iberian peninsular might be able to achieve better synergies.23 Sep 2011
The FT – known for their highly rigorous reporting standards, would beg to differ Pixelmeister wrt EI.
The link (8th item down) is only to the index – unless you get a free taster, full article view requires subscription and am unable to legitimately cut and paste FT content.23 Sep 2011
Interesting we have similar neighbours issues with both suggestions. May be the Irish consumers can be placated as a Spanish acquisition and the Portuguese consumers as a British acquisition…23 Sep 2011