Aer Lingus risks being left behind by mergers, warns transport chief
Published 13/04/2010 | 05:00
Aer Lingus is in danger of being left behind amid a raft of industry consolidation.
In comments that may have implications for the Irish flag carrier, Giovanni Bisignani, director-general and chief executive of the International Air Transport Association (IATA), said mergers were the only way forward for the industry.
"Mergers and consolidation is a must . . . no other industry is so fragmented, we have to consolidate in order to build more efficiency," he said.
Mr Bisignani also called for less regulation of cross-border mergers. Thanks to unified legal frameworks in the EU, mergers between European carriers are relatively straightforward. That is not the case for any consolidation involving US and European carriers.
Mr Bisignani sees more mergers happening in the future. As British Airways completed its tie-up with Iberia last week, it emerged that US Air and United Airlines were also in merger talks.
The director-general's comments may have wide-reaching implications. IATA is the main trade association for airlines, with its 230 members carrying over 90pc of the world's scheduled traffic.
Stephen Furlong, an analyst with Davy Stockbrokers, agreed with Mr Bisignani's sentiments and believes that, in the long term, Aer Lingus may look at a merger.
"There are too many airlines and too much capacity in the industry in general. There is no doubt that consolidation is the way forward," he said.
Mr Furlong believes that Aer Lingus could be attractive to potential bidders.