British Airways and Spanish carrier Iberia have finally agreed on a merger after 16 months of talks. But it's unclear whether the complicated deal will do much to improve the prospects of the two firms, which are floundering badly even by the standards of the aviation industry.
Meanwhile, American Airlines and Delta Airlines are eyeing an investment in the even more troubled Japan Airlines.
The BA/Iberia agreement "should be a triumphant moment for a European airline industry crying out for consolidation", said Fiona Marharg-Bravo on Breakingviews.com. "But while the logic for a tie-up is there, the detail of the deal is disappointing."
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The outcome is tangled: shareholders will receive stock in a new holding company, listed and based in London but registered in Spain. There will be three boards, each divided equally between representatives of the two airlines. "This is the messiest structure since the earlier days of [French-German-Italian aerospace group] EADS, with much the same potential for in-fighting along national lines," said the FT's Lex.
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And that's aside from the problem of sorting out the heavily unionised workforce and the need to resolve BA's pension deficit (Iberia has a get-out clause if this isn't done to its satisfaction). Right now, the plan is so cumbersome that it looks "like two drunks trying to prop each other up", said Matthew Curtin in The Wall Street Journal.
But "these airlines are not alone in their troubles", said The Economist; total losses for the world's carriers this year are likely to be $11bn. So consolidation is set to go global in the fight to survive.
US firms American Airlines and Delta Airlines are fighting to partner Japan Airlines (JAL) to grow their exposure to lucrative Pacific routes, despite JAL's "precarious financial position", said Lex. The firm is burning through cash, while its government rates it as insolvent and is only keeping it out of bankruptcy to avoid the disruption this would cause.
