The Great Debate UK

from Commentaries:

Consolidation Air, nobody’s favourite airline

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JAL/With airlines around the world struggling to survive the economic downturn, the time should be nearing to break the taboo of consolidation in the sector.

Airlines around the globe face losses of $11 billion in 2009, according to IATA. Margins are expected to fall this year and next, with analysts predicting carriers are likely to struggle for years to reach levels needed to produce an acceptable return for capital market investors.

Societe Generale estimated in a recent note that margins would drop to -3.1 percent in 2010 before recovering to 1 percent in 2011, well short of the 10 percent needed.

Effectively we are back to the ice age of 2001-2.

Eight years ago, the collapse of Sabena and Swissair kicked open the door of cross-border consolidation -- within Europe at least. But while deals like Lufthansa's merger with the Swiss airline allowed for some rationalisation, the merged entities remain hamstrung by national aviation regulations.

Pension deficit weighs on British Airways

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REUTERS– Margaret Doyle is a Reuters columnist. The opinions expressed are her own –

Willie Walsh has no incentive to be bullish right now. He has had British Airways on cold rations since joining as chief executive-designate four years ago, and another set of tough union negotiations looms.

BA-Iberia must fast-track reality flight

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alex-smith– Alexander Smith is a Reuters columnist. The opinions expressed are his own –

Anglo-Spanish dealmaking has a chequered recent history — look no further than Ferrovial’s disastrous takeover of airports operator BAA. But this shouldn’t put British Airways and Iberia off fast tracking their planned tie-up to help stem losses.

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