BA Chairman Warns Of Oneworld Breakup
Jan 7, 2009, 4:01 pm
#1
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BA Chairman Warns Of Oneworld Breakup
British Airways Chairman Martin Broughton warned in an interview that the Oneworld alliance could split up if BA's bilateral deal with American Airlines does not get regulatory approval this year.
"The most important deal (for BA) is the American deal," he told the Daily Telegraph. "It's worth a lot of money--hundreds of millions--and prevents the break up of Oneworld." Without AA and BA being able to coordinate fares and schedules in the future, "there has to be a big question mark over the future of Oneworld," Broughton believes.
Broughton pointed out that he considers the AA deal as more important than the planned merger with Iberia. The Iberia link-up would result in around 500 million pounds in synergies, slightly more than what would have been possible in a merger with Qantas.
The BA chairman indicated that current BA shareholders would expect to control more than 60% of the new entity. "There is no magic number but below 60% it would be a struggle to sell it," he hinted.
Separately, Chief Executive Willie Walsh said that he was confident both the BA and Iberia proposals will go through. But if both failed, BA would still not be left behind in the consolidation process, Walsh believes. "There is no shortage of airlines for acquisition. I get phone calls from CEOs all the time saying please buy us. We have to be picky."
"The most important deal (for BA) is the American deal," he told the Daily Telegraph. "It's worth a lot of money--hundreds of millions--and prevents the break up of Oneworld." Without AA and BA being able to coordinate fares and schedules in the future, "there has to be a big question mark over the future of Oneworld," Broughton believes.
Broughton pointed out that he considers the AA deal as more important than the planned merger with Iberia. The Iberia link-up would result in around 500 million pounds in synergies, slightly more than what would have been possible in a merger with Qantas.
The BA chairman indicated that current BA shareholders would expect to control more than 60% of the new entity. "There is no magic number but below 60% it would be a struggle to sell it," he hinted.
Separately, Chief Executive Willie Walsh said that he was confident both the BA and Iberia proposals will go through. But if both failed, BA would still not be left behind in the consolidation process, Walsh believes. "There is no shortage of airlines for acquisition. I get phone calls from CEOs all the time saying please buy us. We have to be picky."
Jan 7, 2009, 4:41 pm
#2
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BA really needs to secure their partnerships otherwise they will run out of strategic options.
Jan 8, 2009, 2:31 am
#3
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Jan 8, 2009, 2:50 am
#5
Join Date: Jan 2001
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The first thing I thought when I read the OP was that Martin Broughton is trying to pile on the political pressure to approve this alliance, hence he's warning of all sorts of dire consequences if it doesn't happen.
Jan 8, 2009, 6:07 am
#6
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TP (allied to Star)
EI (ha ha)
SK (allied to Star and a candidate to be snapped up by LH)
OA (that would be a tragedy)
LO (allied to Star)
MA (please no
)KM (Star and they're tiny)
CY (tiny)
RO (that would be a joke)
I have a feeling that unless the IB deal goes ahead, it will be WW calling others asking to be bought.
Unless deals outside of the EU take place but the regulatory issues to overcome would likely be huge.
Jan 8, 2009, 7:45 am
#8
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Ha Ha. This has got to be a joke.
BA is already stuck in the weakest of the 2 alliances. What possible benefits could come from BA leaving OneWorld (presumably to exist alone) whilst *A tramples all over them?
I'm also still waiting to see where this claimed £500m of synergies from the Iberia deal is going to come from. Synergies where, exactly? Minimal saving in fuel and aircraft purchasing (compared to what BA gets now), no crewing benefit and I assume the whole IB head office will remain in place in Spain (and BA is not exactly an expert at running an efficient slimline Head Office!). You might see more BA codeshares on IB's Latin America routes but BA pax already get TP's and miles if they fly IB on those routes anyway, so adding a BA flight number won't make much difference. BA's short-haul business to Spain was eaten by EasyJet et al a long time ago so little to be gained there from the merger - certainly no monopoly benefits.
BA is already stuck in the weakest of the 2 alliances. What possible benefits could come from BA leaving OneWorld (presumably to exist alone) whilst *A tramples all over them?
I'm also still waiting to see where this claimed £500m of synergies from the Iberia deal is going to come from. Synergies where, exactly? Minimal saving in fuel and aircraft purchasing (compared to what BA gets now), no crewing benefit and I assume the whole IB head office will remain in place in Spain (and BA is not exactly an expert at running an efficient slimline Head Office!). You might see more BA codeshares on IB's Latin America routes but BA pax already get TP's and miles if they fly IB on those routes anyway, so adding a BA flight number won't make much difference. BA's short-haul business to Spain was eaten by EasyJet et al a long time ago so little to be gained there from the merger - certainly no monopoly benefits.
Jan 8, 2009, 7:45 am
#9
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I don't understand the scaremongering. If oneworld were to get disbanded and replaced by a series of bilateral agreements between interested carriers, I would expect only about 3 non-FTers to notice the change.
As well as OK+ and doubtless a few other FFPs.
JAT is also independent (SU may be interested in buying them), as is Bulgaria Air, but they are quite small, too. The likes of JP/OU/OK/RO/A3 may not be owned by other airlines, but they have quite cosy relationships with AF/LH.
As well as OK+ and doubtless a few other FFPs.
JAT is also independent (SU may be interested in buying them), as is Bulgaria Air, but they are quite small, too. The likes of JP/OU/OK/RO/A3 may not be owned by other airlines, but they have quite cosy relationships with AF/LH.
Jan 8, 2009, 8:53 am
#10
Join Date: Jun 2003
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Ha Ha. This has got to be a joke.
BA is already stuck in the weakest of the 2 alliances. What possible benefits could come from BA leaving OneWorld (presumably to exist alone) whilst *A tramples all over them?
I'm also still waiting to see where this claimed £500m of synergies from the Iberia deal is going to come from. Synergies where, exactly? Minimal saving in fuel and aircraft purchasing (compared to what BA gets now), no crewing benefit and I assume the whole IB head office will remain in place in Spain (and BA is not exactly an expert at running an efficient slimline Head Office!). You might see more BA codeshares on IB's Latin America routes but BA pax already get TP's and miles if they fly IB on those routes anyway, so adding a BA flight number won't make much difference. BA's short-haul business to Spain was eaten by EasyJet et al a long time ago so little to be gained there from the merger - certainly no monopoly benefits.
BA is already stuck in the weakest of the 2 alliances. What possible benefits could come from BA leaving OneWorld (presumably to exist alone) whilst *A tramples all over them?
I'm also still waiting to see where this claimed £500m of synergies from the Iberia deal is going to come from. Synergies where, exactly? Minimal saving in fuel and aircraft purchasing (compared to what BA gets now), no crewing benefit and I assume the whole IB head office will remain in place in Spain (and BA is not exactly an expert at running an efficient slimline Head Office!). You might see more BA codeshares on IB's Latin America routes but BA pax already get TP's and miles if they fly IB on those routes anyway, so adding a BA flight number won't make much difference. BA's short-haul business to Spain was eaten by EasyJet et al a long time ago so little to be gained there from the merger - certainly no monopoly benefits.
Jan 9, 2009, 12:26 am
#12
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Jan 9, 2009, 2:33 am
#13
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Ha Ha. This has got to be a joke.
BA is already stuck in the weakest of the 2 alliances. What possible benefits could come from BA leaving OneWorld (presumably to exist alone) whilst *A tramples all over them?
I'm also still waiting to see where this claimed £500m of synergies from the Iberia deal is going to come from. Synergies where, exactly? Minimal saving in fuel and aircraft purchasing (compared to what BA gets now), no crewing benefit and I assume the whole IB head office will remain in place in Spain (and BA is not exactly an expert at running an efficient slimline Head Office!). You might see more BA codeshares on IB's Latin America routes but BA pax already get TP's and miles if they fly IB on those routes anyway, so adding a BA flight number won't make much difference. BA's short-haul business to Spain was eaten by EasyJet et al a long time ago so little to be gained there from the merger - certainly no monopoly benefits.
BA is already stuck in the weakest of the 2 alliances. What possible benefits could come from BA leaving OneWorld (presumably to exist alone) whilst *A tramples all over them?
I'm also still waiting to see where this claimed £500m of synergies from the Iberia deal is going to come from. Synergies where, exactly? Minimal saving in fuel and aircraft purchasing (compared to what BA gets now), no crewing benefit and I assume the whole IB head office will remain in place in Spain (and BA is not exactly an expert at running an efficient slimline Head Office!). You might see more BA codeshares on IB's Latin America routes but BA pax already get TP's and miles if they fly IB on those routes anyway, so adding a BA flight number won't make much difference. BA's short-haul business to Spain was eaten by EasyJet et al a long time ago so little to be gained there from the merger - certainly no monopoly benefits.
Jan 9, 2009, 5:09 am
#14
Join Date: Sep 2005
Location: UK
Posts: 1,314
I'm also still waiting to see where this claimed £500m of synergies from the Iberia deal is going to come from. Synergies where, exactly? Minimal saving in fuel and aircraft purchasing (compared to what BA gets now), no crewing benefit and I assume the whole IB head office will remain in place in Spain (and BA is not exactly an expert at running an efficient slimline Head Office!). You might see more BA codeshares on IB's Latin America routes but BA pax already get TP's and miles if they fly IB on those routes anyway, so adding a BA flight number won't make much difference. BA's short-haul business to Spain was eaten by EasyJet et al a long time ago so little to be gained there from the merger - certainly no monopoly benefits.