How will a confusing BA-Iberia merger benefit passengers?

| 29-11-2009 | Spanish Business • UK Business | Written by Matthew Bennett

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Have you got your head around how the BA-Iberia merger will benefit passengers yet? The FT has profiled chief executive Willie Walsh, who more or less seems a little bit clearer, perhaps, about all the confusion.

Already disorientated over what to call the new European airline – they rashly opted for the imaginative new ‘TopCo‘ and two separate but equally imaginative ‘OpCos‘ to allow a Brit to run BA in the UK and a Spaniard to run Iberia in Spain – the new company will undoubtedly suffer from regular headaches with a corporate tax base in Madrid and an operating base in London.

When the corporate flying aces come back down to earth from the dizzying heights of international mergers – after hallucinating together over important brand synergies and significant cross-cultural cost savings – will the BA-Iberia merger really provide passengers with more assurance, comfort and efficiency?

Perhaps Willie Walsh is the man they need to sort out all the confusion. The FT thinks he might be: restless, Mr. Walsh hasn’t had a holiday since 2005 but even he doesn’t seem to be quite certain of how it will all work in the real world.

Regarding the possibility, for example, of a BA-Iberia-TopCo-OpCo(UK) buying some extra parking spaces at Heathrow, which might be freed-up following the Lufthansa buy-out of BMI:

Mr Walsh has long said BA would be interested in buying the airline or its slots, which raises an interesting point about the structure of the proposed BA-Iberia structure.

Would the purchase of the slots, should it happen, be done by the BA “OpCo”?

“Yes,” said Mr Walsh, “or it could be TopCo”.

[From FT.com / Companies / Airlines - Spanish step is start of ex-pilot’s global wish-list ]

The BA-Iberia deal has been modeled on Air France-KLM and it could open the way to some kind of deal with other, non-European airlines: Quantas and American Airlines are the two mentioned in the article.

There’s nothing like a bit of variety in life, but it seems there are more headaches and agitation on the horizon for now.