The IAG CEO Willie Walsh gave an insight into his views of consolidation in the airline industry, on the announcement of the IAG 2011 Full Year results on the 29th of February in a rapid changing environment where there is opportunities and threats.
A constantly theme on the conference call was the need for further consolidation with a particular emphasis on the US Industry, this is very interesting on the context of a potential marketing tie-up between American Airlines (Oneworld) and JetBlue Airways. The IAG CEO previously stated interest in JetBlue Airways given its strong position in the New York market where it is competing against Delta Airlines (JFK) and United Airlines (Newark
The IAG CEO Willie Walsh views on the evolving consolidation are interesting as Aer Lingus considers its strategic options, Willie indicated that Joint-Ventures offer many benefits (Cost/Revenues) without the full issues of a merger and there is a growing trend of these Joint-Ventures within Alliances, in the Oneworld Alliance two separate JV’s are in place for different global markets with the trilateral JV AA/IB/BA (Atlantic ) and IB/BA/QF (Asian/Australia).
The carrier is yielding benefits of developing a Singapore Hub where sectors are shared between partners (British Airways and Qantas Airways), thus reducing operating costs and allowing re-deployment of aircraft within the networks, as BA has been able to re-deploy capacity onto the Atlantic . The IAG Group is pursuing a new JVA with JAL Airlines for which it expects regulatory approval from the Japanese authorities in the next 12 months.
IAG CEO Willie Walsh Quotes:
‘Airline failures are the cheapest form of airline consolidation’.
‘We will focus on the integration of BMI and we are open for further opportunities where it is sensible effective consolidation’.
‘There is room for further consolidation in the US
‘Growing trend of emergence of JV’s within alliances’.
‘Joint Ventures make sense consolidation working very well’.
‘This is an exciting time for the US Industry it has to consolidate further as this would change the regulatory environment’.
It will be interesting to see how the IAG acquisition strategy evolves as joint-ventures rather than acquisitions come into prominence in the industry, given the airline had drawn up a list of 12 potential targets to pursue in 2010 ,in the context of a very challenging market environment, as JV’s would allow consolidation synergies without impacting on the balance sheet.
Irish Aviation Research Institute © 5th March 2012 All Rights Reserved.
