The arrogance of the British Airways management and its CEO, Willie Walsh, knows no limits.
There he is struggling with huge losses, possible strikes, a difficult merger with another loss making European dinosaur in Iberia, and he’s out casting his eye over Qantas once again, through an interview with the Financial Times.
According to the FT report the Iberia model would allow Qantas to retain a separate brand and home base.
That refers to the fact that the merger between BA and Iberia won’t actually happen at an airline level.
A holding company (the two airlines can’t agree on a new name) would sit on top of Iberia and BA.
Gradually there would be back office, catering and other synergies wrung out of the businesses by being combined, but the two airlines would have to keep their separate identities for operational and legal reasons.
"So we actually learnt a lot by going through the process with Qantas,’ Mr Walsh said in the FT interview.
"So the answer to this; could it? Yes. Will it? I don’t see any prospect of that in the short, medium, or indeed long term."
"I think the discussions we had with Qantas were interesting.
"They probably could have gone a bit further if it wasn’t for the fact that there was a change in management and various other things, but we’ve not had any discussions; we’re not intending to have any discussions with Qantas."
Walsh said there are no plans to pursue a tie-up at present, and the “quite negative” political reaction in Australia to a proposed deal last year would be a “major hurdle”.
"We didn’t move beyond what was I think a good idea, but I think a reaction in Australia to the development would be a barrier to us looking at that in the future
"To be honest, I was a little bit surprised; not totally surprised, but the political reaction to the suggestion of us getting together was quite negative.
"And from that point of view, I think that’s a major hurdle. I think it’s a big hurdle for Qantas."
"The media reaction was much more negative than I had expected.
"For that reason I would personally see that as a significant hurdle that would need to be overcome."
"Having spent time and effort in debating the issue first time round, you’d want to be pretty sure that those hurdles were not going to be insurmountable."
British Airways abandoned merger talks with Qantas last December after the airlines failed to agree on who would control the new company and Iberia kicked up a fuss.
Qantas’ market cap of more than $A6 billion is more than the value of either Iberia or BA, both of which are losing money and facing possible industrial problems.
The main FT story was a warning from Mr Walsh to staff that he won’t tolerate industrial action, yet another round of industrial trouble to hit BA’s operations.
It doesn’t happen every year, but it seems like it does.
Meanwhile Qantas indicated yesterday that despite the continuing tough times in aviation it planned to spend $4.4 billion over the next two years as it purchases new aircraft and improve the business.
In a briefing for investors, the airline said it will spend $1.7 billion in the current 2010 financial year and $2.7 billion in 2011.
That will include buying 43 planes of which eight will be Airbus SAS A380s.
Qantas is also looking to cut costs by $1.5 billion over three years (which is a continuation of former targets) and it is also promising to change the configuration of more and more of its jets to cut business and other premium seating and expand lower fare seating at the back of the planes.
It is also spending hundreds of millions of dollars speeding up check-ins at domestic terminals around Australia, expanding and reworking its online presence and moving into social media.
One airline is heading for a complicated merger, the other has the confidence to continue spending to grow the business through re-investment.
There’s a moral in there for anyone interested: no wonder Qantas has market cap and an investment grade superior to both BA and Iberia.
There was no mention of any earnings updates in the investor briefing details.
Qantas shares closed up 3c at $2.72 yesterday.
