Foreword A
fter years of negotiations, the merger of BA and Iberia fi nally became a reality in January 2011, meaning that the new International Airlines Group (IAG) now boasts a network of 204 destinations on fi ve continents. The merger has created the third largest airline group in Europe and the sixth largest in the world by revenues.
The group is forecasting annual synergies worth €400 million by 2016, with 60% of these synergies being realised from cost savings, and 40% from larger revenues.
The cost savings are good news for the new mega airline group, but its network reach is the real draw card for its European passengers. Now, BA customers will get unparalleled access to 19 Latin American countries, which Iberia fl ies to direct from Madrid, while Iberia clients will get an enhanced offering to Asia, thanks to BA’s strong network in that region.
BA has also welcomed the enhanced access to Madrid Barajas, and Willie Walsh, the new CEO of IAG, has made it no secret that BA views Madrid as its chance to expand and leverage new opportunities – something that has simply not been possible in London.
Heathrow’s capacity constraints are not going to go away but, at the same time, there appears to be no progress on a future strategy either. Political wrangling on the subject continues to rumble on as the UK coalition government has ruled out a third runway and the Conservative mayor, Boris Johnson, is lobbying for the construction of an entirely new hub airport, to the south
east of London. Clearly, this situation has made it diffi cult for BA to map out its future strategy in the UK capital.
Amid this background, the rumours continue to swirl around a potential sale of Virgin Atlantic. Its chairman Richard Branson has conceded that it is becoming increasingly diffi cult for an independent Virgin Atlantic to compete against the likes of IAG.
Media rumours have named Etihad as a potential buyer, on which the Gulf carrier has not commented.
With Singapore Airlines already owning 49% of Virgin and the UK airline codesharing with some Star members on certain routes, the question is whether another Star Alliance member may have an interest in the famously branded UK airline – perhaps Lufthansa, which has already successfully snapped up the likes of bmi and Austrian.
Only time will tell.
Editor-in-Chief Lucy Siebert
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