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Aug 6, 2012 | 5:30 am

#17

Hannibal Lecter

Join Date: Oct 2009

Posts: 5,045

IAG eyes American Airlines stake

International Airlines Group is considering the case for buying a minority stake in American Airlines to expand their commercial partnership and ensure the US carrier remains part of Oneworld, the global airline alliance.

Willie Walsh, IAG’s chief executive, told the Financial Times that buying a small stake in American could help cement the US carrier’s membership in Oneworld, the alliance to which his group also belongs.

He also voiced strong support for a merger between American, the third-largest US carrier by revenue, and US Airways, the fifth largest.

Mr Walsh said the idea of IAG investing in American “is something we are going to look at”.

“If we can make the case that there is additional strategic value to be achieved, then it is certainly something we are prepared to do,” he added.

Some analysts are concerned that November’s bankruptcy filing by AMR, American’s parent company, could have negative consequences for IAG.

British Airways, IAG’s UK subsidiary, has a joint venture with American that operates long-haul flights over the North Atlantic – one of the world’s most lucrative air travel markets.

With AMR seeking to reduce its operating costs and debt load through the Chapter 11 bankruptcy process, several potential suitors are circling.

Delta Air Lines, the second-largest US carrier, has been considering the case for a bid for American – and such a scenario, if realised, could hurt IAG.

Delta is a leading member of SkyTeam, another global airline alliance, and a deal with American might result in its exit from Oneworld and the joint venture with BA.

But Mr Walsh said regulators would almost certainly block a combination between Delta and American.

In making the argument for a potential investment by IAG in American, he highlighted how Delta last year bought a 5 per cent stake in Gol, the Brazilian airline, for $100m.

The deal gave Delta a seat on Gol’s board and also involved an enhanced commercial partnership between the two airlines, partly based on code-sharing. The transaction was seen by analysts as ending the risk of Gol joining Oneworld.

Mr Walsh said Delta’s investment in Gol “is a very good example of where a small stake – a real strategic investment – can have benefits well beyond the scale of the investment”.

The IAG chief executive also said he saw “definite attractions” in a combination between American and US Airways.

US Airways has said if it combined with American, the merged entity would seek to remain in Oneworld. US Airways is a member of Star, another global airline alliance.

The combined carrier would have a bigger network, and US airline consolidation has provided better pricing power to the remaining players.

http://www.ft.com/intl/cms/s/0/41dc8...#axzz22lSqqakj

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