Queries on Walsh announcement
- Latest News
- Friday, 10 September 2010
BA-Iberia already have earmarked Asia as a key region for expansion once their own merger completes, though restrictions on foreign investment - including in India - could restrict the number and range of acquisition targets.
India's Kingfisher Airlines, which signed a code-sharing agreement with BA in early September, could be a target if it were not for India's ownership restrictions.
The Middle East's Gulf Air, which said this week it was ready to talk to BA, may be willing to enter discussions but not to surrender itself completely. Chinese carriers Air China, China Southern and China Eastern may be keen on foreign investment, but less keen on being taken over.
Walsh said earlier this week that BA and Iberia - whose merger will create the world's third-largest airline by revenue and be called International Airlines Group (IAG) - already has compiled a list of 12 airline potential targets.
The question on everyone's lips is exactly which 12 are on the list - and which ones are possible takeover targets.
"Asia is where it's at. BA is looking for growth and Asia is the biggest growth market right now," said London-based Davy Stockbrokers' analyst Stephen Furlong.
However, India prohibits foreign airlines buying stakes in local carriers and in China, any single overseas investor is unable to take more than a 25 per cent stake in a Chinese carrier.
The wider question is what carriers are of interest to a oneworld major like BA.
Oneworld partners already contribute to the alliance's bottom line so they are - while attractive targets - less valuable acquisitions.
Oneworld partner competitors are of (arguably) zero value from an acquisitions point of view as removing them from their markets would cost money and achieve nothing for IAG.
The key seems to be whether IAG really is looking for carriers to completely buy out.
If it is not, then Kelvin Lau of analyst Daiwa Securities says Thai Airways and carriers in Malaysia may prove keener to sell stakes to BA than carriers in China.
