British Airways and the Spanish airline Iberia said during the weekend that they are looking for new airline acquisitions, even though their own merger talks are still incomplete.
The Finnish national airline Finnair has come up in discussions on the merger.
BA’s CEO Willie Walsh says that BA-Iberia has drawn up a list of 12 possible acquisition targets. He would not say which airlines are on the list, but analysts immediately saw Finnair as a possible merger partner.
Walsh emphasised that no negotiations are underway yet about the matter. He added that the focus now is on setting goals.
However, on Tuesday Walsh said in The Australian Financial Review that BA would like to start talks with the Australian airline Quantas.
Previous talks on a merger fell apart two years ago over disagreements over the valuation of the two companies.
Quantas has been seen by some analysts as a first choice as a partner of BA-Iberia, as its dense network in the Far East would considerably strengthen the British-Spanish carrier’s activities in the world’s fastest-growing market.
However, Finnair would also provide such an advantage. The Finnish airline’s extensive network in Europe could feed passengers between Asia and Europe via Helsinki-Vantaa Airport.
BA would be able to collect passengers to Asia only from the British Isles, while Iberia, lacking the routes, could do even less.
Finnair’s strategy of flying European passengers to Asia has worked magnificently.
The company said on Tuesday this week that its traffic on Asian routes grew in August by nearly nine per cent over the same period last year. The growth has been almost uninterrupted.
Finnair carries many passengers from both Britain and Spain to Asia, which has not gone unnoticed by BA-Iberia.
British Airways flies to six destinations in the Far East, while Finnair serves nine.
Nagoya and Osaka in Japan, as well as the South Korean capital Seoul are destinations of Finnair, but not of BA. The other destinations are the same.
However, Finnair’s biggest attraction is its European feeder network. With it, BA-Iberia-Finnair could seriously challenge its main rivals, Lufthansa and Air France-KLM.
The blow could be quite strong, as it would allow the merged company to gather passengers from the back yards of its competitors.
Another question is whether or not the Finnish state would be willing to sell Finnair, which has been classified as a strategic national asset.
Although Finnair’s foreign routes would be a golden egg for BA-Iberia, the situation can always change.
Finnair is quite capable of operating independently, in spite of recent losses. Previous failures of possible mergers with Lufthansa and the Scandinavian SAS have proven to be blessings.
For a merger to take place, the price would have to be lucrative.
Membership in the Oneworld Alliance is probably enough for Finnair for now.
BA, Iberia, and Quantas are all part of the same alliance, whose other leading members are American Airlines, the Japanese JAL, and the Hong Kong carrier Cathay Pacific.
BA-Iberia may have to make do with smaller fish. The Indian Kingfisher and the German airline Air Berlin have been mentioned as options.
Analysts say nevertheless that there is a need for mergers, as there are still too many airlines in the world.
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Helsingin Sanomat
Internation Edition
Thursday 9.9.2010
