A new couple in the aircraft industry has been announced on the 8th of April 2010, which could become the third-largest airline group.
After the mergers of Lufthansa with Swiss, and Air France with KLM, this is now the turn of British AIrways and Iberia. This merger would create a company with more than €14 billion revenues, 408 aircraft and 58 million passengers per year.
The drums join the orchestra for this news!!
What are the reasons which have pushed the two companies to "tune" not their violin but their planes in order to play their music together, forming the new duo in the sky?
After the mergers of Lufthansa with Swiss, and Air France with KLM, this is now the turn of British AIrways and Iberia. This merger would create a company with more than €14 billion revenues, 408 aircraft and 58 million passengers per year.
The drums join the orchestra for this news!!
What are the reasons which have pushed the two companies to "tune" not their violin but their planes in order to play their music together, forming the new duo in the sky?
British airways recorded revenues of £8.992 million during the financial year ended March 2009, an increase of 2.7% over 2008, and has more than 40,000 employees. Iberia recorded revenues of €5,223 million during the same financial year, and has around 22,500 employees.
The two companies gathered a total amount of €750 million last year for net profits, but the aircraft market is sensitive to the competition of low-cost companies such as easyJet, or the oil prices and the economic slow-down. This merger will let them be more important in the negociation of the oil prices and the planes for example. The two companies also have different strenghts, such as the North America for BA and the South America for Iberia; and will weiht around €6 billion on the stock exchange.
Newpapers analysis:
Newpapers analysis:
The Telegraph only gives key facts (coming from Reuters) of the merger in its first article "BA and Iberia complete merger:key facts". Indeed the new CEO will be the BA one, Willie Walsh, the chairman the former Iberia's CEO Antonio Vazquez, and the headquarter will be situated in London, even though the operations will be in Euro.
In the second article entitled "Ba and Iberia sign €5.8bn merger deal", Alistair Osborne starts saying that is was the most important news of the day, because this merger would create a company with more than €14 billion revenues, and a market vaue of €5.8bn. He then explains that the two subsidiaries will retain their own brands in order to preserve existing traffic rights, even if it will be listed as International Airlines Group. The name has been chosen for the company to become the "top company" and the author explains that the regulations will allow future mergers, their first target being American Airlines. According to the Telegraph, this new company has everything to become a leader of the aircraft market in the future.
Les Echos, a French newspapers, in its article entitled "British airways and Iberia will birth to the European number three in the air transport", seems to be optimistic by the news at the beginning of the article. indeed it gives positive figures such as 408 planes, more than 60 million passengers per year, trhough 200 destinations. But then is specifies that the report still has to be approved by the shareholders of the two groups, and more important by the competition authorities in Brussels. Then the authof states that Iberia can still cancel this merger if BA cannot reduce its deficit of £3.7bn. He finishes in insisting on the fact that BA is always in conflict with its staff through the trade union Unite, and that the strike in March had cost £45 million.
It seems that the companies still have to tune their instruments for good music, or maybe should BA practice more its financial scales...
Jane Wardell, an Ap Business Writer, explains in her article "BA and Iberia sign merger deal" that the industry is broken by the global financial crisis and "wracked" by the industrial unrest. She quotes an analyst at Davy Stockbrockers in Dublin: "The Problem is that there are too many airlines. To be a major player in global aviation going forward, you are going to have size and scope and a network". But Jane Wardell explains that the companies have structured their deal, and that their rivals have worries because the new company hopes to extend this alliance with American Airlines. But she then quotes Bob Atkinson, the director of the web site Travelsupermarket.com in order to show that consumers groups have been skeptical in some points: "Any cost savings will only be felt by passengers if the business integrates quickly". It shows that some points in the merger are not clear, and form like a cluster.
My opinion:
Les Echos, a French newspapers, in its article entitled "British airways and Iberia will birth to the European number three in the air transport", seems to be optimistic by the news at the beginning of the article. indeed it gives positive figures such as 408 planes, more than 60 million passengers per year, trhough 200 destinations. But then is specifies that the report still has to be approved by the shareholders of the two groups, and more important by the competition authorities in Brussels. Then the authof states that Iberia can still cancel this merger if BA cannot reduce its deficit of £3.7bn. He finishes in insisting on the fact that BA is always in conflict with its staff through the trade union Unite, and that the strike in March had cost £45 million.
It seems that the companies still have to tune their instruments for good music, or maybe should BA practice more its financial scales...
Jane Wardell, an Ap Business Writer, explains in her article "BA and Iberia sign merger deal" that the industry is broken by the global financial crisis and "wracked" by the industrial unrest. She quotes an analyst at Davy Stockbrockers in Dublin: "The Problem is that there are too many airlines. To be a major player in global aviation going forward, you are going to have size and scope and a network". But Jane Wardell explains that the companies have structured their deal, and that their rivals have worries because the new company hopes to extend this alliance with American Airlines. But she then quotes Bob Atkinson, the director of the web site Travelsupermarket.com in order to show that consumers groups have been skeptical in some points: "Any cost savings will only be felt by passengers if the business integrates quickly". It shows that some points in the merger are not clear, and form like a cluster.
My opinion:
I think that this new has been well perceived by the different newspapers, even if there are always the questions of the BA's staff recently on strike and the problem of its debt, as well as the result concerning the consumers cost savings which seems not to have been specified yet. To my opinion I think this merger is a good thing with the current crises, and I wonder with the issues the aviation has presently, how companies like BA or Iberia do not go bankrupt. But I do not think tjat prices will go down. it did go down for the other merger of Air France of Lufthansa. I onder if it would make a bigger difference on prices if there was a merger between a low-cost and a non-low-cost?
the music for this week is of course the Nuptial March of Mendelssohn:
Sources:
"British Airways and Iberia will give birth to the European number third of the air transport", Les Echos, 9th of April 2010
"BA and Iberia sign €5.8bn merger deal", Telegraph, 9th of April 2010
"BA and Iberia complete merger: key facts", Telegraph, 8th of April
"Ba and Iberia sign merger deal", AP, 8th of April 2010
Very good entry. The three sources you compare are good exmaples of how different coverage can be. 7/10
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