29 July 2008

BA+IB - this time BABI its for real

British Airways and Iberia have finally started that long trip up the aisle. Not content to have the Alliance in One World and the Select Gang of 3 with American - this time they have realized that perhaps they are better together. Let's call this arrangement BABI!

Iberia's Ownership has been in doubt for some time since TPG made a slight move about 18 months ago. Then BA said it wanted out of the ownership position. (it owns about 10%). Now as Iberia has struggled with the position of not being quite big enough and having little room to grow - it has finally come to the realization that its future is probably better under the BA banner than going it alone.

BA fresh from it's absorbing of L'avion, is looking to put some more ASMs under its belt to replace those lost by the defections of GBAirways and BMED last year. The strength of AF/KL and LH/LX has made the map of Europe look mighty inviting. It also strengthens their position in any potential merger with AA.

Not wishing to put too fine a point on it - while the deal is/was inevitable - it is still not necessarily the right thing to do. This time the regulators in Brussels should be looking at the deal with a lot more eyes.

And just how big with the new carrier be? The deal will make BABI the 3rd largest carrier in terms of revenue, probably 5th largest just ahead of a slimmed down UAL in terms of pax and the same just ahead of CO in terms of RPMs.



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