Lowering the flag: Europe's airlines head for a shakeout
August 2017 - United Kingdom

August 2017

In this article about the European Airline Industry, Andrew Smith at Arthur D Little is quoted as saying: "In the past few years the European airline sector has seen record-breaking profitability but this is mostly down to the very low oil price. It is still a very fragmented market compared to its cousin across the pond. There's every reason to think there will be more consolidation." Smith pointed out that one factor in further deals could be Brexit. Although he thought the likelihood of flights between the UK and EU being grounded because of the pair failing to strike an aviation agreement before April 2019 was a "doomsday scenario", he says it could spur some deals - or alliances such as IAG, which owns British Airways, Iberia and Aer Lingus. "I think there will be more consolidation but you cannot assume it will be straightforward M&A," he says. "Part of the reason is because of anti-trust rules and alliances are quite a convenient way of solving the problem of market access without having to go over the hurdle of buying an entire airline."