21 May 2007

Will Willie make a run at Iberia?

So far Willie Walsh's tenure at the head of the World's Favorite Airline has been a bit of a dud. While vowing to clean house he has been relatively low profile and not a heck of a lot seems to be going on at Waterside these days. Not quite what the Board wanted in a CEO after kicking out Ayling and having the able Rod Eddington stabilize the business.

But this is about to change. Frustrated with the pace of change and now faced with the impending loss of Bermuda II rights at LHR - BA needs to make its move on to the continent and soon.

Iberia is a perfect candidate - already a strategic investment vehicle for BA and a OneWorld member there is little overlap between the airlines. But with OpenSkies coming within the next 12 months the time to build up alliances is not something that happens overnight. For success to happen now - BA needs also to benefit from a loosening of the leash on its relationship with AA. The argument is there already. If DL and AF and their sub-partners can have a nice a tight alignment there is no longer a reason to restrain BA and AA. It will just depend on how far the US DoJ and the EU can come to terms in fairness and openness on the Transatlantic.

If BA does not push the issue then we can be pretty sure that they have received the word that such a boost in the alliance would be frowned on and result in a somewhat pyrrhic victory - with BA being forced to surrender slots at LHR. Something right now it doesn't want to do.

Interestingly this would be a coming together of Spanish and UK interests hard on the heels of last year's takeover of BAA by the Spaniards. Sir Francis Drake must be spinning in his grave.



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