Aer Lingus may need to merge - Walsh

THE FUTURE of Aer Lingus as an independent carrier is not secure and the company needs to consider merging with one or more other airlines, its former chief executive has warned.

Willie Walsh, chief executive of British Airways, was speaking at the University of Limerick yesterday where he delivered a lecture at the Kemmy Business School entitled A Sustainable Future for Aviation.

The former Aer Lingus boss admits he argued in the past that Aer Lingus had a future as a stand-alone airline, but says the global aviation industry has changed since then and was now facing record losses.

“I think things have changed since then and given what’s happened to the economy here and given the way Aer Lingus has struggled in recent times I think you could now make an argument that its future as an independent carrier is not that secure and maybe Aer Lingus does need to look at a relationship with some other carrier or a number of other carriers,” he said.

According to Mr Walsh, the airline industry is facing its biggest ever crisis and significant structural change is one of the only ways that airlines can make it through the current downturn.

He believes that consolidation within the industry’s 500 major airlines is necessary, and while it won’t solve the problem “it is part of the solution”.

“I don’t think you need 500 competitors in order to have a competitive environment for consumers. I think the industry is overly fragmented and would benefit from some consolidation. There are some restrictions in place still around ownership and control and there’s political influence that makes it difficult, but I think ultimately we will see a reshaping of the industry.”

According to Mr Walsh, Aer Lingus must address its cost base and its shareholding structure before it can attract any potential investors.

He also described the current challenge facing its new CEO Christoph Muller as “probably even greater” than the challenge he faced when he took over in October 2001.

The BA boss said the company has no immediate plans to operate direct services from Ireland. However, he didn’t rule out the possibility of more BA transatlantic flights stopping at Shannon airport to avail of the US customs and immigration pre-clearance facility.