BA's Walsh predicts more airline failures

Apr 26, 2012 08:24AM GMT

BA's Walsh predicts more airline failures

Further airline failures in have been predicted in the coming year by International Airlines Group chief executive Willie Walsh.

He joined other industry leaders in predicting further retrenchment, as weaker airlines struggle to generate the cash needed to ride out high oil prices.

"I expect to see significant moves on the subject of consolidation as we move through the year and into next year," Walsh told the Aircraft Financial and Commercial Aviation conference in Barcelona.

Although some groups like IAG itself are expected to take over smaller rivals, Walsh said the shake-up would also include "probably the cheapest form of consolidation for the industry and that is where we see airlines fail".

Walsh delivered his comments with a warning to striking Spanish pilots that IAG-owned Iberia would "have no future" if it did not see through reforms that include the creation of budget offshoot Iberia Express, designed to replace labour rules at the main carrier.

Spanish pilots are staging a series of strikes to try to halt the creation of the cheaper sister airline. Walsh said he would not back down on the move to get rid of pilot contracts he called "frankly outrageous".

"For anyone who doesn't know me I am not known for backing down in the face of threats of industrial action - and I certainly don't back down when faced with (actual) industrial action. Therefore we will see this restructuring through," he said.

Walsh confirmed IAG would close two loss-making subsidiaries inherited from the acquisition of BMI if it is unable to sell them, Reuters reported.

IAG plans to keep the main airline but is struggling to sell its low-cost and regional units Bmibaby and BMI regional.

He backed Gulf carriers like Emirates, Etihad and Qatar Airways against charges of unfair competition leveled by rivals such as Air France.

"I personally believe the industry has matured to a point where we'll see Middle East carriers joining the alliances this year. I'd be amazed if this doesn't happen. Within Oneworld we have been debating it. To my mind they are the key players," Walsh said.