British Airways, Iberia Could Buy Low-Cost Airline, CEO Says

International Consolidated Airlines Group SA, the combination of British Airways and Iberia, would consider adding a discount airline to the company, Chief Executive Officer Willie Walsh said.

IAG is “clearly ambitious” about further consolidation and a low-cost carrier that could feed short-haul traffic into BA and Iberia long-haul routes would fit in the group, Walsh said today at the ICBI Aircraft Finance and Commercial Aviation conference in Geneva.

“We see no reason it can’t happen,” said the 49-year-old CEO, who oversaw the merger of British Airways Plc and Iberia Lineas Aereas de Espana SA, completed last month.

Air Berlin Plc, Germany’s largest discount carrier, said in July that it would join the Oneworld airline alliance led by AMR Inc.’s American Airlines, British Airways and Iberia. The company will first share flight codes with member airlines, then become a full member early in 2012.

Vueling Airlines, the Spanish discount carrier that is 46 percent owned by Iberia, already feeds traffic into some of full-service IAG’s network, Walsh said.

IAG isn’t concerned about a competitor buying a stake in Virgin Atlantic Airways, the carrier controlled by billionaire Richard Branson, Walsh said. Air France-KLM and Delta Air Lines Inc. hired Goldman Sachs Group Inc. to assist them in a possible joint bid, the Sunday Times reported Feb. 20.

“They’re competitors already,” Walsh said. “It’s not as if there’s someone new. It should be interesting to watch.”

Virgin Atlantic may have little value to other airline groups beyond the number of takeoff and landing slots that it holds at London’s Heathrow airport, according to Walsh. Virgin, the second-largest long-haul airline based at Heathrow, had 3.1 percent of flights at the airport this winter season, according to Airport Coordination Ltd., which allocates capacity at the airfield.

To contact the reporters on this story: Steven Rothwell in London at srothwell@bloomberg.net; Andrea Rothman in Toulouse, France at aerothman@bloomberg.net.

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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