British Airways’ parent company IAG has put its acquisition plans on hold as the poor economic outlook in Europe dampens its ambitions.
Speaking in Beijing this week, IAG’s chief executive Willie Walsh said that the group would not be following up on its interest in Portugal’s national carrier TAP, and would instead wait and see what opportunities arose about of the tough market conditions.
TAP was considered the likely next addition to the IAG portfolio, following its recent acquisition of bmi from Lufthansa. But in an interview with Bloomberg TV, Walsh said the deal would not be completed any time soon.
“We aren’t looking at any acquisitions,” Walsh told reporters in the Chinese capital on Wednesday. “I don’t see that there’s anything likely to be available in the short term that would be of interest. What I think we’ll see in 2012 and 2013 is airline failures.”
So far this year, Europe has seen a several airlines go out of business, including Hungary’s national carrier Malev and Spain’s Spanair, and Walsh said these collapses were reflective of the state of the airline industry today.
“If you look at Barcelona and Budapest that’s exactly as we’ve said it should happen,” he said. “I think from an overall industry point of view the time has come for a proper cleanout. You can say that’s very cold and heartless, but we’re in business and the reality is that the weak fail.”
According to the latest IATA forecast, released in Beijing earlier this week, European carriers are expected to sink to combined losses of US$1.1 billion (£708m) this year.
This gloomy outlook, combined with the fact that IAG slumped to losses of EUR249m (£202m) in the first quarter of this year, appear to have curtailed IAG’s once ambitious expansion plans. Walsh said last year that he had a list of 10 airlines he would like to see join the IAG stable.
