“Beat fares down so far that you’re the last airline standing in the low-cost sector.” That’s Ryanair’s strategy, said Jeremy Warner in The Independent, “but at British Airways, Willie Walsh is pursuing a “more gentlemanly” approach. Hence the announcement of a proposed £4bn link-up with Spanish national carrier Iberia to create Europe’s biggest airline.
“Having dated for ten years, British Airways and Iberia are finally getting engaged,” said Fiona Maharg-Bravo on Breakingviews.”But this isn’t a classic defensive merger aimed just at dealing with a tough market.” It won’t solve the carriers’ immediate problems of fewer passengers and costlier fuel.
How the merger could help
Yet the move “offers significant cost savings to both, and is a further step towards a much-needed consolidation of the European airline industry”, said The Times’s Martin Waller. It also “creates a new European power capable of entering transatlantic talks with American Airlines on a more equal footing”, noted The Daily Telegraph’s Damian Reece.
Expect to see more mergers now that major airlines are circling their smaller rivals as the sector’s outlook darkens: other European flag carriers, such as Austrian Airlines, “are trying to find shelter, fast”, says Caroline Brothers in the International Herald Tribune.
BAY
: 261p; 12m change –36%
IBLA
: e0.34; 12m change –42%