British Airways Waiting On JAL To Pursue Antitrust Immunity
November 02 2010 - 4:51PM
Dow Jones News
The head of British Airways PLC (BAIRY) said Tuesday that plans
to expand its alliance with Japan Airlines Corp. (JALSQ) through a
landmark antitrust application remain on hold while the Asian
carrier cements its links with American Airlines.
American, a unit of AMR Corp. (AMR), recently secured immunity
to expand its links with JAL on transpacific flights. BA said
earlier this year it would seek similar status with JAL for
services between the U.K. and Japan in 2011 in what would be the
first effort to win immunity on flights between Europe and
Asia.
For JAL, the American relationship is of "greater significance"
right now, according to BA Chief Executive Willie Walsh, but BA
remains happy to discuss a joint application for antitrust immunity
if and when JAL is ready. Walsh made the remarks during a luncheon
presentation in New York City to discuss BA's first-half
performance, reported last week.
BA isn't "overly concerned" about tougher new cargo-screening
rules following Friday's discovery of explosives aboard cargo
flights, he added, noting cargo is just 8% of BA's business and it
doesn't serve Yemen or Somalia, identified as the sources of the
threat.
In an interview following remarks and an open
question-and-answer session, Walsh said he's "never been critical
of Emirates [Airline's] approach to business." Delta Air Lines Inc.
(DAL), partner Air France-KLM and other airlines have lately taken
to bashing Emirates and other Middle East carriers, alleging
subsidies those carriers receive are unfair, a charge they
deny.
However, Walsh did say he believes European Union lawmakers are
growing perturbed with those airlines' use of so-called export
credits loans that give cheap financing for the purchase of new
aircraft. The credits were intended to help carriers struggling to
find acceptable financing, he said, which is not the case of
airlines like Emirates, which reported nearly $1 billion in
first-half profits on Monday.
Walsh said "without question" there will be consolidation among
European airlines, and reiterated a desire to discuss the purchase
of British Midland Airways Ltd., or bmi, if parent Deutsche
Lufthansa AG (DLAKY) decides to sell it.
Sweden's SAS, which Lufthansa said Monday it is interested in
acquiring, is also in play as a takeover candidate, Walsh said, as
is Finland's Finnair PLC. He also pointed to Aer Lingus Group PLC
(EIL1.DB), which may be a target after competitor Ryanair Holdings
PLC (RYAAY) said Monday it thinks the Irish government will sell
its Aer Lingus stake, and TAP Air Portugal. Eastern European
carriers are also potential acquisitions, he said.
Walsh said some of the airlines he discussed were attractive to
BA and others weren't, but bmi was the only carrier he singled out
as a BA target, citing synergies with the fellow U.K. airline. He
said "several" airline CEOs have approached him about a deal.
An air-passenger tax hike in the U.K., which went into effect
Monday, will have a "significant negative impact on the U.K.
economy," Walsh said, and should be scrapped. Harm to companies
doing business in or with the U.K. will outweigh any benefit to the
government from increased tax revenue.
Walsh also defended frank and controversial remarks made last
week by BA Chairman Martin Broughton, who slammed
passenger-security demands by the U.S. as "completely redundant,"
and blasted the U.K. for "kowtowing." Walsh said he was not at the
Airport Operators Association conference with Broughton, but said
he believed Broughton was "equally critical of Europe" and didn't
single out the U.S. Among other gripes, the outspoken Broughton
decried the removal of shoes and separate checks of laptops for
passengers boarding flights.
-By Maxwell Murphy, Dow Jones Newswires; 212-416-2171;
maxwell.murphy@dowjones.com
(Doug Cameron contributed to this article.)