As British Airways and Iberia finally walk down the aisle, European rivals are accelerating their search for the perfect partner to fall in love with. But with a finite number of potential suitors, some will be giving thought to the prospect of being left on the shelf
The bunting is coming out across the UK for April's wedding of the year between future king Prince William and his fiancée Kate Middleton. But by the time those royal nuptials begin, another British icon will already be enjoying the honeymoon period after having finally consummated a much-anticipated and long-expected marriage.
After years playing the field - and a few shattered dreams - British Airways was in danger of being left on the shelf. Then in June 2008 it decided that oneworld partner Iberia was the one, after a decade of courtship. Three years on their International Airlines Group holding structure is in place and the two are already planning a family.
Perhaps this is because while BA and Iberia got engaged early, they are the last down the aisle in the consolidation wave that has gripped Europe over the past two years. While negotiations dragged on against the backdrop of the financial crisis that hit the UK carrier's value and pensions scheme, rivals moved ahead.
Lufthansa embarked on a spending spree that brought Austrian, bmi and Brussels Airlines into its orbit, while Lufthansa Italia and Aerologic further widened its activities. Air France-KLM meanwhile tapped Alitalia as its Italian partner and quietly bolstered its regional business with VLM.
So rather than powering into the lead, IAG, with the pugnacious Willie Walsh at the wheel, is driving flat out to catch its European rivals. Back in the summer of 2008 when the tie-up was announced, it would have been third in the global rankings by revenue behind only Lufthansa and Air France-KLM. But based on last year's Airline Business World Ranking, merger activity elsewhere has pushed the Anglo-Spanish combo down to seventh.
So it is no surprise that Walsh has drawn up his famous wishlist of 12 carriers and repeatedly emphasises IAG's strategic ambition "to provide a platform that is attractive to other like-minded airlines to join us".
While the names on the list are from across the globe, it is perhaps Europe where the consolidation spotlight seems likely to turn.
A number of carriers uninvolved in major consolidation to date, but far from untouched, are being touted to join the game. A host of carriers could be up for sale or seeking an alliance partner this year. But wanting a partner or buyer is one thing. Being sought after is another altogether.
"There is a swathe of carriers that are potentially for sale," notes RBS analyst Andrew Lobbenberg. "But it is not clear what the logic is for a network carrier to be buying them."
As the year begins, attention is already focusing on Virgin Atlantic as it confronts a new reality after Sir Richard Branson lost his long battle against BA's transatlantic tie-up with American Airlines. Virgin has hired Deutsche Bank to review its strategic options and claims there have been several lines of enquiry about tie-ups, prompting speculation on potential suitors. And will Star's Singapore Airlines look to sell its 49% stake in the process?
Speculation continues to surround the likelihood that SAS's Nordic government owners are ready to sell their stake. Star partner Lufthansa has long been tipped as a likely suitor.
Elsewhere in Europe, Poland's LOT heads a number of central European airlines that could be on the block this year. Privatisation also remains in the sights of TAP Portugal.
This consolidation push could be further driven by Europe's economic woes as governments accelerate asset sales to tackle debt. But there is also the airlines' desire to decide their own fates and form strong partnerships that will secure long-term survival - even within a bigger group. But with a finite number of attractive partners, the risk of being forever the bridesmaid will make for anxious times this year.
Source: Airline Business
