Virgin angry over BA-Iberia plan

Virgin Atlantic has claimed a merged British Airways and Iberia would be an “anti-competitive monopoly”. BA announced this week it had started talks about a proposed merger that would see both brands maintained as part of a combined group, similar to Air France-KLM.

A merger would make the airline the second-biggest carrier by passenger numbers in Europe, behind Air France-KLM but ahead of Lufthansa-Swiss. At Heathrow, Iberia’s 2.5% share of slots would be added to BA’s 42% share.

Virgin Atlantic, which holds 2.5% of Heathrow’s slots, claimed a merger would allow the new carrier to hike fares and limit competition. “What is wrong about this deal is its scale,” said a spokesman. “BA has such scale that it is becoming an anti-competitive monopoly on some routes.”

Virgin will wait to see more details before deciding whether to make a formal objection to the EU. The airlines are confident of EU approval because they have co-operated closely for 10 years. BA already shares profits and revenue on Iberia routes from Heathrow and they own stakes in each other.

The two carriers now face months of discussions over issues such as headquarters location, staffing levels, senior appointments and distribution of shares. A shares hand-out would be based on market valuation. BA would be the dominant partner as it is valued at €3.4 billion, compared with Iberia’s €1.5 billion.

Clive Green, of Clive Green Travel, said the powerful Spanish pilots’ union could be reluctant to accept Willie Walsh – dubbed “slasher” for his cost-cutting while at the helm at Aer Lingus – as chief executive.

Flight Centre managing director Chris Galanty said a merger could be good for the industry if it ensured the success of both airlines, and the new group recognised the value of trade distribution. Investment bank Dresdner Kleinwort said the deal made strategic sense. BA is expected to reveal a big drop in first-quarter profits tomorrow.

source: TTG live

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