Holiday Rentals News - More mergers likely in airline sector, warns BA boss

More mergers likely in airline sector, warns BA boss

The airline business is set for a difficult year with bankruptcies and mergers likely, the chief executive of British Airways has warned.

The sector is an early victim of the global economic slowdown, feeling the effects of both consumer uncertainty - particularly in the USA - and an oil price that has doubled to around $127 (£63) a barrel in the last year, Willie Walsh argued.

Speaking to BA investors on Monday, Mr Walsh suggested that some airlines are likely to merge or go out of business altogether in the coming months.

"I suspect that many airlines out there that struggled when fuel was less than $100 a barrel are not going to be able to take the required actions and we will see further failures," he said.

According to Reuters, seven airlines have failed in the last five months.

Pointing to Delta's takeover of US airline Northwest announced last month, Mr Walsh said: "We will see meaningful consolidation, sooner rather than later."

Not every airline is struggling in the current economic climate, however. BA itself announced a rise in profits of 45 per cent last week.

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