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hen the governor of the Bank of leave only five carriers existing in their present form. BA
W
England said at the end of October chief executive Willie Walsh even described the situation
that the UK was entering a recession, back in July as “worse than 9/11”.
he wasn’t telling us anything we Since then, the price has settled at about $70 a barrel,
didn’t already know. alleviating a substantial amount of the financial pressure.
Economic growth has declined for two successive But the landscape has changed forever. Plagued by
financial quarters, confirming analysts fears that we are overcapacity for too long, a realignment is long overdue.
now in the eye of the storm. With the housing price
bubble well and truly burst, spending on food at an all Takeovers and alliances
time low and major financial institutions scrambling to
THE AIRLINE
British Airways’ transatlantic alliance with American
recapitalise, the outlook is decidedly bleak. Airlines could soon become a reality, despite protests
Travel, and air travel in particular, seems destined to
INDUSTRY
from Virgin Atlantic. And its proposed merger with
suffer. Until the economy returns to previous levels of
HAS ALREADY
Spanish flag carrier Iberia is back on, although BA’s
liquidity, UK plc will have no option but to batten down
ENDURED WHAT
massive pension fund deficit, which dwarfs its market
the hatches and wait for the credit cloud to lift.
HAS, ARGUABLY,
capitalisation, threatens to scupper the link-up. Then
While most of us are only now feeling the brunt of the there’s the mammoth merger between Delta and
crisis, the airline industry has already endured what has
BEEN ITS MOST
Northwest Airlines which, if and when it goes through,
arguably been its most torrid year since the Wright TORRID YEAR would create the biggest airline in the world.
brothers first took to the skies. When oil reached $147 a
IN HISTORY
Lufthansa has recently taken a majority share in BMI,
barrel, Iata predicted losses would reach more than £3 a 45% stake in Brussels Airlines, and continues to be
billion across the sector, while some airline executives linked to takeover bids for both Austrian Airlines and
forecast a flurry of mergers and acquisitions that would SAS. At the no-frills end of the market, Ryanair
ttgbusiness.com a79 november 2008
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