Thursday, July 3, 2008

BA - AA - IB

British Airways is back in merger news with reports of a ménage à trois "operational merger " with American Airlines and Iberia. The article notes, "The deal would allow the companies to combine nearly all aspects of their operations, including sales, purchasing and marketing, leading to lower costs and greater economies of scale." And it goes on to say that it could lead to a full merger if foreign ownership rules changed in both the United States and Spain. I'm no expert on this subject, but I find that unlikely.

BA and AA have tried this twice before and have been rejected due to the behemoth monopoly the combined operation would have for transatlantic travel, specifically its Heathrow slots. The two carriers are betting that the industry's flailing state will convince regulators they need to approve this move.

This is a bit beyond my expertise, but something about getting the US, UK and Spanish governments to approve an airline merger doesn't seem all that likely.

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