Skift Take

A combined AA and US Airways bolstered by some love from British Airways and Iberia could very well be the global powerhouse out of the US and Europe that could challenge the expanding airlines out of the Middle East and Asia.

International Airlines Group, the BA and Iberia carrier, is considering taking a small stake in a new US airline expected to be formed by a merger of American Airlines and US Airways.

The UK-listed group was one of the first to sign a confidentiality agreement giving it access to AA’s financial books but Willie Walsh, IAG’s chief executive, is adopting a cautious approach about making a financial commitment to a cash-hungry airline seeking help to climb out of administration.

AA went into administration in November after confirming it was heading for its fourth annual loss. US Airways has emerged as a leading candidate to help rescue its rival carrier.

It already has the support of AA’s unions and is seeking backing from major creditors.

Mr Walsh is anxious to strengthen IAG’s position in the US and protect its position on the important North Atlantic routes. IAG already has close links with AA through membership of the Oneworld alliance of airlines.

But relations with US Airways have been more explosive. Newly privatised BA took a stake in what was then US Air in 1993 to provide a bridgehead for expansion in the US but relations between the two sides soured when BA decided AA would make a better and stronger partner.

The US Air alliance ended in 1996 when the US carrier mounted legal action in Britain after the announcement of the BA and AA tie-up.

Doug Parker, the current US Airways chief executive, is pushing the AA merger because of the potential benefits from being part of what would be the world’s biggest airline.


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Tags: american airlines, british airways, us airways

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