Airlines need to merge to survive, says industry head

Further mergers among airlines are essential, according to one the sector’s leading figures.

The International Air Transport Association’s director general Giovanni Bisignani is reported as saying that such activity would help cut costs and improve competitiveness in an industry that has suffered combined losses of £1.8bn this year.

“Mergers and consolidation is a must. No other industry is so fragmented, so we have to consolidate in order to build more efficiency,” Bisignani told reporters.

He called for regulatory support for barrier-free mergers across borders, explaining that different legal frameworks have hindered extensive global industry consolidation, involving, for example, U.S. and European airlines.

“I’m raising the agenda of freedom on consolidation because we cannot do the same thing (as in Europe, where some cross-border mergers have been helped by unified legal frameworks) between an American and a European carrier.”

Asked about a possible merger between United Airlines and US Airways, he said he would not comment on individual deals.

“There are many many conversations going on. Everyone is dating, but I make no comments on dating,” Bisignani is reported as saying.

The comments came during a visit Japan to meet transport minister Seiji Maehara.

They also come just a few days after British Airways and Spanish airline Iberia signed a deal to merge and create one of the world’s biggest airline groups.The new company will be called International Airlines Group, but
A link-up between BA and American Airlines is also on the horizon, though the deal is being opposed by rivals Virgin Atlantic.

IATA, which comprises about 230 airlines, including United Airlines and US Airways, forecast last month that carriers would lose a combined $2.8bn (£1.8bn) this year after a $9.4bn (£6.15bn) loss last year, but should post a combined profit in 2011.

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