Walsh ponders bid for American Airlines

International Airlines Group chief executive Willie Walsh is considering buying part of British Airways’ transatlantic partner American Airlines, according to reports at the weekend.

Walsh is examining options for taking a stake in American after US carriers Delta Air Lines and US Airways appointed investment firms to advise on potential bids of their own.

American Airlines entered Chapter 11 bankruptcy protection last November after failing to win agreements with unions on substantial cuts in pay. The carrier aims to restructure and emerge from Chapter 11 this year.

The Sunday Times reported Walsh is studying more than one option: IAG could buy a stake itself or as a minority partner in a US-led consortium of investors which may bid for outright control of American.

BA is a long-time partner of American and the pair launched a lucrative transatlantic partnership last year after a long wait to receive anti-trust immunity.

The pair’s lengthy courtship has been expected to end in a merger, but has been held up by regulators and by US restrictions on foreign ownership of airlines. These limit a non-US investor’s financial stake to 49% and voting stake to 25%.

The Sunday Times reported Delta Air Lines, the partner of Air France-KLM, has appointed Blackstone to advise on a bid and US Airways appointed Barclays Capital.

A bid by Delta would almost certainly attract regulatory interest, since it would reduce the big three US legacy airlines to two.

The smaller US Airways might face fewer regulatory issues, having missed out on the previous round of consolidation among US carriers. However, it’s doubtful US Airways would have the resources to take over American.

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