BA may revive merger plan
“It is a possibility,” said Leo Seaton, a BA spokesman.
“We will be watching very closely how regulators approach KLM-Air France. Our priority right now is fixing our core business.”
Air France, Europe’s second-largest airline, has offered €784 million in stock for KLM. BA and Deutsche Lufthansa, the region’s number three carrier, may also seek to buy competitors as growth in demand for air travel slows and competition from low-cost airlines increases, analysts have said.
BA abandoned a merger with American, the world’s largest carrier, in February 2002 after regulators demanded the two give up 224 take-off slots at London’s Heathrow airport and the US and Britain failed to agree a trans-Atlantic accord on landing rights.
“The European Union now has a mandate to negotiate an air-services treaty with the US on behalf of all member States,’ said Seaton.
“We’d see that as a further step toward consolidation.” Analysts said any revival of the merger talks was unlikely because of the lack of progress on the trans-Atlantic accord.
“I can’t see it,’ said Keith McMullan, managing director of London-based consultancy Aviation Economics. “It’s anti-competitive; they’re too big across the Atlantic so any attempt at a merger would fail for the same reasons as before.”
Any hints that BA may re-examine a combination with American may be “an attempt to confuse the Air France-KLM situation,’ McMullan said.
British Airways is shedding 13,000 jobs and reducing its European short-haul fleet to cut costs after the war in Iraq, the outbreak of SARS and slowing economies discouraged air travel earlier this year.
The carrier is seeking to reduce costs by 650 million pounds ($1.1 billion) by March 2004 and an additional 450 million pounds by March 2005.
BA in February said it was planning to introduce a limited partnership with American after the pair scrapped plans for a wider alliance.
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