British Airways and Iberia to merge, sort of

[JF Mezei]

They have been courting each otherf or years, playing hard to get for
years, but it appears that they have finally agreed to a wedding.

A new holding company is to be created which will own both British
Airways and Iberia. BA shareholders will get 55% of the new company,
Iberaia shareholders get 45% of the new company.

Both BA and IB will continue as separate brands/operations for at least
5 years but will save hundreds of millions through rationalisation of
services (IT, fuel purchases etc). (Of course, all mergers make such
greate promises of cost savings, but their rarely materialise).


So this will mirror AirFrance-KLM and not really be a true merger.

So, apart from feeding the egos of the CEOs who wanted to add
"responsible for large merger" to their CVs, will this accomplish anything ?
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[John Levine]

Post by JF Mezei
So, apart from feeding the egos of the CEOs who wanted to add
"responsible for large merger" to their CVs, will this accomplish anything ?

"Rationalization" of routes and fares, of course. I don't know where
they already had revenue sharing agreements, but now they have them
everywhere they fly.

R's,
John
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[JF Mezei]

Post by John Levine
"Rationalization" of routes and fares, of course. I don't know where
they already had revenue sharing agreements, but now they have them
everywhere they fly.

BBC put a lot of emphasis on the fact that there was very little overlap
between the two in terms of routes, so I have to wonder how much
rationlization can be done in terms of routes. Both Madrid and LHR
remain hubs. How much rationlisation of routes was done with
AirFrance-LMN ? It appears that the two have remained quite separate in
terms of operations.

Iberia is a typical "euro" airline with Airbus fleet. Its long haul
consists of 32 A340s (12 340-600 and 20 340-300). Short haul is A320
family with a mix of ATR72, Dash-8 and CRJs for regional hops.

Not exactly compatible with BA's fleet. However, since the 340s are
likely to be replaced, this could be an opportunity to make Iberia's
long haul fleet compatible with that of BA's.
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[Uwe Klein]

Post by JF Mezei
Not exactly compatible with BA's fleet. However, since the 340s are
likely to be replaced, this could be an opportunity to make Iberia's
long haul fleet compatible with that of BA's.

BA + IB ~= LH ( re distribution of types )

One core reason for Lufthansa success seems to be a
well balanced and carefully utilised fleet.

so your gut reaction to get rid of the A part
of the fleet is probably not the best advice

uwe
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[JF Mezei]

Post by Uwe Klein
so your gut reaction to get rid of the A part
of the fleet is probably not the best advice

When you compare the 4 engined 340 with the newer twins (777, 787, 350),
aren't there compelling arguments to move away from the 340 ? Not saying
that they have to do this right away, but I would think this would be in
the cards.

And if Iberia has "replace A340s" plans, then the so called merger with
BA might allow Iberia to benefit from some deals that BA had negotiated.
This is one area where, even though they may remain separate airlines,
the merger can be beneficial.

On the other hand, because Spain does a fair amount of work for Airbus,
there may be political pressure on Iberia to buy Airbus aircraft to keep
jobs in Spain. In such a case, the merger with BA won't do much for deal
making.
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[Uwe Klein]

Post by JF Mezei

Post by Uwe Klein
so your gut reaction to get rid of the A part
of the fleet is probably not the best advice

When you compare the 4 engined 340 with the newer twins (777, 787, 350),
aren't there compelling arguments to move away from the 340 ? Not saying
that they have to do this right away, but I would think this would be in
the cards.

BA and IB both have problems that imho are not fixable with minimal
increases in airplane efficiencies.

There is good reason I pointed to LH, who with a fleet that tends to be
derided as less efficient and outdated produces excellent results.

To paraphrase : two sightless persons don't gain anything
from a new colorTV for living together.

Post by JF Mezei
On the other hand, because Spain does a fair amount of work for Airbus,
there may be political pressure on Iberia to buy Airbus aircraft to keep
jobs in Spain. In such a case, the merger with BA won't do much for deal
making.

If you look at LH, AF/KLM .. "buy local" seems to be not that strong a
coercion in Europe.

uwe
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[Jeff Hacker]

Post by JF Mezei
They have been courting each otherf or years, playing hard to get for
years, but it appears that they have finally agreed to a wedding.
A new holding company is to be created which will own both British
Airways and Iberia. BA shareholders will get 55% of the new company,
Iberaia shareholders get 45% of the new company.
Both BA and IB will continue as separate brands/operations for at least
5 years but will save hundreds of millions through rationalisation of
services (IT, fuel purchases etc). (Of course, all mergers make such
greate promises of cost savings, but their rarely materialise).
So this will mirror AirFrance-KLM and not really be a true merger.
So, apart from feeding the egos of the CEOs who wanted to add
"responsible for large merger" to their CVs, will this accomplish anything ?
--

Actually, the AF/KL "merger" has saved the new entity a significant amount
of money by combining back room expenses.

Post by JF Mezei
misc.travel.air-industry is a moderated newsgroup. Please mail messages to

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