European airlines in deal drive to boost profits and open up routes
Europe’s three biggest long-haul airlines are pushing ahead with a series of deals that would transform the aviation landscape in the region by opening up lucrative new routes and the prospect of higher profits. If the deals materialise, it will help turn a fragmented sector with dozens of national flag carriers into a market more like the US, where just a handful of large airlines dominate the skies. British Airways owner IAG, Lufthansa and Air-France KLM are all hoping to gain regulatory approval for deals that would give them a combined share of nearly three quarters of the long-haul market. “Europe airlines need to consolidate,” said Ryanair CE Michael O’Leary. “We will emerge with an industry not unlike America: US groups carrying 200mn passengers annually that have the ability to invest,” he added. If regulators back IAG’s purchase of Air Europa and Lufthansa’s swoop on ITA after Air-France KLM this month took a 20% stake in SAS, then Europe will have taken a major step towards replicating the US market, the world’s most profitable. All three airline groups have also expressed an interest in buying part of Portugal’s national carrier TAP after Lisbon’s government this month announced the start of a privatisation process. At least one major airline group has also considered a push into eastern Europe with a bid for a national airline there, according to a person familiar with the matter. However, winning regulatory approval for cross-border mergers could be difficult in Europe, industry experts have warned. On Tuesday, the new EU antitrust commissioner told the Financial Times that the bloc planned to tighten rules around airline mergers because of competition concerns. “There should and will be more consolidation in Europe, but it is sometimes a daunting challenge . . . traditionally there has always been national interest and identity that has been inexorably linked to the airline industry,” said Dan McKone, senior partner at consultancy LEK.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-10-19/general/european-airlines-in-deal-drive-to-boost-profits-and-open-up-routes
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European airlines in deal drive to boost profits and open up routes
Europe’s three biggest long-haul airlines are pushing ahead with a series of deals that would transform the aviation landscape in the region by opening up lucrative new routes and the prospect of higher profits. If the deals materialise, it will help turn a fragmented sector with dozens of national flag carriers into a market more like the US, where just a handful of large airlines dominate the skies. British Airways owner IAG, Lufthansa and Air-France KLM are all hoping to gain regulatory approval for deals that would give them a combined share of nearly three quarters of the long-haul market. “Europe airlines need to consolidate,” said Ryanair CE Michael O’Leary. “We will emerge with an industry not unlike America: US groups carrying 200mn passengers annually that have the ability to invest,” he added. If regulators back IAG’s purchase of Air Europa and Lufthansa’s swoop on ITA after Air-France KLM this month took a 20% stake in SAS, then Europe will have taken a major step towards replicating the US market, the world’s most profitable. All three airline groups have also expressed an interest in buying part of Portugal’s national carrier TAP after Lisbon’s government this month announced the start of a privatisation process. At least one major airline group has also considered a push into eastern Europe with a bid for a national airline there, according to a person familiar with the matter. However, winning regulatory approval for cross-border mergers could be difficult in Europe, industry experts have warned. On Tuesday, the new EU antitrust commissioner told the Financial Times that the bloc planned to tighten rules around airline mergers because of competition concerns. “There should and will be more consolidation in Europe, but it is sometimes a daunting challenge . . . traditionally there has always been national interest and identity that has been inexorably linked to the airline industry,” said Dan McKone, senior partner at consultancy LEK.<br/>
