ONE result of high oil prices and imminent recession has been a stampede among the European airlines to merge and consolidate.
In challenging market conditions, big is best as far as airlines are concerned.
Size gives passengers a greater choice of destinations through an enlarged network.
It offers opportunities for cost savings in aircraft purchases, maintenance and ground handling.
At the end of the process of consolidation we will be left with three mega carriers in Europe, Air France- KLM, Lufthansa and British Airways.
Lufthansa already owns Swiss International Airlines which it acquired in 2005. It is now to take a 45% stake in Brussels Airlines, itself the result of an unusual merger between low cost carrier Virgin Express and the Belgium flag carrier SN Brussels Airlines, with an option to acquire the remaining 55% from 2011.
Air France-KLM was born out of a 2004 merger between Air France and KLM. It also owns Transavia, City Jet and VLM Airlines. It is now competing with Lufthansa to consolidate a number of smaller European airlines.
Both airlines are on the short list to buy the 43% government stake in Austrian Airlines. They are also competing to take a minority stake in a rescued Alitalia in Italy. Alitalia has been loss-making almost permanently but EU rules now restrict the ability of the Italian government to bail it out. A rescue plan has been formed by a consortium of Italian businessmen who will inject funds to enableamerger of the profitable parts with Air One, the second largest Italian carrier. |
