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More airline failures to come, says BA's Walsh 26 April 2012

Willie Walsh, the chief executive officer of International Airlines Group (IAG) today issued a warning that further airlines would face bankruptcy this year.

The news comes after the IAG – the parent company of British Airways and Iberia – confirmed earlier in the week that it has no ‘long term plans’ to integrate loss-making BMI Baby and BMI Regional into its fleet after the BMI acquisition from Lufthansa.

Walsh told a conference in Barcelona that weaker airlines would continue to struggle to overcome the costs from increasing fuel prices which would inevitably lead to further consolidation in the market through the year.

According to media reports from the event, Walsh said consolidation was unlikely to be limited to larger groups buying smaller rivals and was quoted as describing it as “the cheapest form of consolidation – where we see airlines fail.”

The past 12 months has seen several high-profile victims claimed in the European and international airline sector, including Astraeus, Spanair and American Airlines (which has already filed for Chapter 11 bankruptcy protection).

The US carrier’s parent company unveiled restructuring plans to slash around 13,000 jobs globally – 15 per cent of its workforce – in February.

In November, Gatwick-based Astraeus Airlines collapsed after contracts from Asia, South America and the Middle East failed to materialise, highlighting the dependence on immediate new business that many airlines have.

 

 

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