BusinessCompany NewsOverview: mile high club

Overview: mile high club

Prospects: which airlines are getting into bed with each other?

Just when British Airways thought it had everything organised at the T5
check-in area it seems its corporate affairs turn out to be much more
complicated than even getting your baggage sent to the right place.

The airline, it emerged last, week is in talks with Qantas, the Australian
airline, about a merger, while previous talks with Spanish airline Iberia are
still on the back burner.

What’s happened?

The three big airlines have been caught up in some kind of Mexican stand-off
as they discuss, or otherwise dispute, just who is in talks with who about
merger.

BA was certainly in talks with Qantas last week but Iberia executives were
saying they thought they were still in talks with BA and that a three-way
combination was going to be much too complicated to pull off.

The development leaves the three finance directors wondering which of them
might still be on the board when the merger is complete or whether they will all
still be in separate airlines in the near future.

What will happen?

At this point in time it looks like the three parties will go on talking to
resolve what it is they are all doing.

The finance directors ­ Keith Williams at BA, Colin Storrie at Qantas and
Iberia’s Enrique Depuy de Lome ­ will be first and foremost involved in making
sure the numbers are crunched and that everyone understands what the likely
financial outcome will be.

Privately, if three or two become one, they’ll be thinking whether to stay or
go. At the outset of merger talks the conversation about board positions can be
a difficult one and very
sensitive. Many a merger has floundered over the issue of who will have what job
or title once the dust has settled. Though, to be fair, its rare that the ‘make
or break’ deal is over the FD’s post.

Even if this particular merger comes apart, it is likely that one or all of
the FDs here will find themselves part of another merger at some point in the
near future. The airline industry has suffered badly recently and consolidation
is now more likely than ever because of the economies that can be gained. But
for the personalities involved it also comes down to who gets the top job.

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