BA boss Willie Walsh has been a busy boy: if he didn't have enough on his plate with all these union wrangles, weather disruptions and phantom crash warnings, he's also apparently been drawing up a list of up to 12 airlines that BA is interested in buying or merging with once its tie-up with Iberia goes through. Wash says he wants to ‘create a platform for like-minded airlines’, and although he didn’t name names, rumoured targets include the likes of India’s Kingfisher and Chile’s LAN. Walsh is quite right to keep thinking about the long game. But drawing up a list of targets is one thing. Convincing shareholders, governments and regulators that the deal makes sense is quite another.
Walsh was speaking in Mumbai, where he’s just signed up Kingfisher to the Star Alliance – BA’s first deal with an Indian carrier. The combative BA boss is slated to run the combined BA/Iberia (or the International Airlines Group, as it will be blandly called) once the merger goes through. And he made no bones about what his strategy would be: further consolidation. Apparently a long-list of 40 potential targets has now been whittled down to 12, based on a series of meetings around the world – including both budget airlines and national flag carriers – and he’ll pursue some (but not all) of them once he gets his feet under the table at IAG HQ.
The trouble is, any deals will be easier said than done. As BA discovered from the failure of its merger talks with Qantas a couple of years ago, buying an airline in another country is an incredibly complex and sensitive business; most national governments have restrictions on foreign ownership, and airline regulators will undoubtedly take a close interest in a deal that could create the world’s biggest airline.
Walsh readily accepts all this. But (as is his wont) he still seems pretty bullish that there’s a way round it; either because the restrictions will be eased, or because there’ll be some way of structuring the deal to comply with them. And although he admits that some of the 12 wouldn’t be straightforward (like LAN, which has just announced a merger with a Brazilian carrier TAM), he reckons some would be ‘possible almost immediately’.
Walsh is clearly a big believer in the merits of consolidation. And he’s probably right. But will BA seem an attractive bedfellow, even for ‘like-minded’ airlines? Its damaging personnel row rumbles on, as Walsh’s latest comments on his ‘dysfunctional’ union opponent, Unite, remind us. (‘Divide and conquer’ seems to be his latest negotiating tactic: Walsh suggested the BASSA arm was largely to blame for the failure to end the dispute, even suggesting he could do a deal with Unite boss Tony Woodley ‘today’ were it not for them). Potential partners might be forgiven for thinking BA is more trouble than it’s worth.
Still, it will keep Walsh out of mischief for a while. MT bumped into him in a coffee shop last week, and he told us he was having his first day off this year. Judging by his latest comments, he won’t be having many more between now and Christmas.