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British Airways Willie Walsh warns of more airline failures to come

News reports state that British Airways and Iberia boss Willie Walsh warned of further airline bankruptcies in the coming year and said he envied the economic model of major Gulf carriers that have managed to redraw the aviation map efficiently around the Middle East. The chief executive of International Airlines Group joined the head of Dubai's Emirates and 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 AFCA aircraft finance conference in Barcelona. Although some airlines like IAG itself are expected to gobble up 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". About half a dozen European airlines have folded in the past year including Barcelona-based Spanair which stopped trading in January despite a cash injection from the Catalan government. Walsh delivered his comments with a warning to striking Spanish pilots that Iberia would "have no future" if it did not see through reforms that include the creation of low-cost 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, who led BA to a merger with Spain's Iberia under the umbrella of IAG last year after a bitter series of cabin crew strikes in the UK, said he would not back down on the move to get rid of pilot contracts he called "frankly outrageous". In further blunt comments, Walsh said IAG would close two loss-making subsidiaries inherited from the acquisition of Lufthansa's UK unit bmi if it is unable to sell them. IAG plans to keep the main bmi airline, but is struggling to sell its low-cost and regional units, bmibaby and regional. It meanwhile continues to seek acquisition targets. "Our approach will be one of greater caution. We are not looking to consolidate just to make IAG bigger," Walsh said.

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