“Weaker, peripheral” European airlines will struggle and possibly close under the twin pressures of increased competition and a weak economy, according to the chief executive of one of the region’s biggest carriers.
Willie Walsh, chief executive of International Airlines Group (IAG), parent of British Airways and Iberia, predicted yesterday that some carriers are likely to close as the shake up in the European industry continues.
“There is clear evidence that there are weaker, more peripheral airlines that are struggling,” Mr Walsh said, adding that with little appetite in Europe for investment, some carriers are likely to close.
Vulnerable players
He refused to name the airlines that he believed were most at risk, but suggested that the most vulnerable players are likely to feel most pressure during the winter months, between now and the early part of next year.
He said that Europe's weak economy, combined with increased competition from lower-cost carriers such as Ryanair, Easyjet and Spanish-based Vueling, in which IAG holds a majority stake, will make it increasingly difficult for the airlines that he believes are most at risk.
While he stressed that he was not singling it out as a candidate for closure, Mr Walsh, pointed at the problems faced by Italian flag carrier, Alitalia – which has said that it needs more cash – as evidence of the difficulties facing European airlines.
Head-to-head
Low-cost carrier Vueling is likely to go head-to-head with Ryanair on some routes, and while Mr Walsh conceded that it would be unlikely to compete with the Irish player on cost, it could do so on service.
Mr Walsh, who was speaking on British Airways inaugural flight from Heathrow to Chengdu, in China, said that Ryanair’s cost base was “significantly lower” than Vueling’s.
The IAG chief executive suggested that BA’s new route to Chengdu could have a spin-off benefit for Ireland. The airline serves both Dublin and Belfast from Heathrow. Mr Walsh said that, in terms of the outbound market from China “there is a lot of interest in the Irish market”.
Chengdu is the capital of Sichuan province in the southwest of China and is home to 18 million people. According to Mr Walsh, traffic through its airport grew to 32 million last year from 12 million in 2005.
