IAG boss Willie Walsh says several airlines will struggle this winter

 
Rebecca Smith
Monarch collapsed at the beginning of the month
Monarch collapsed at the beginning of the month (Source: Getty)

The chief executive of British Airways owner IAG said today there could be more turbulence ahead for the aviation industry after the collapse of Monarch, and Air Berlin and Alitalia's troubles.

Walsh said there were "three, maybe four airlines" he thinks will struggle this winter.

"I think there are other airlines that are weak and may face challenges," Walsh said at the Airport Operators Association annual conference. "Fuel prices are edging up, it was over $60 this morning, the dollar is still strong relative to the euro, the pound," he said, pointing to "airlines that don't have much dollar revenue, and a lot of dollar expense."

"I don't think there's any on the brink of collapse at this stage, but I think there are some where if things were to go wrong this winter, there are certainly a few airlines out there that are very weak and wouldn't take much," he said.

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When pressed for further detail, Walsh said "there is a handful" of airlines that "will face a challenge this winter", though he wouldn't be drawn on specific carriers.

"If Michael O'Leary was here, he'd give you a list of names," he added.

Ryanair boss Michael O'Leary had said last month that Norwegian was "running out of cash", which the airline rebuffed, saying the comments had "no root in reality", and it has been profitable for the last 10 years.

Elsewhere, Flybe issued a profit warning earlier this month, following a rise in aircraft maintenance costs.

When asked whether IAG might be circling other airlines to beef up its numbers, Walsh said: "We're always looking," noting that the company had made a bid for Air Berlin's Niki.

But he added: "We're not targeting weak airlines to fix them".

IAG is on track to post record profits this year, and Walsh said the trading environment this year "is certainly better than it was last year, and better than what we expected".

The airlines that did run into trouble this year, he said, were "fundamentally weak".

"They've never changed," Walsh added of Alitalia. "They have failed to recognise or refused to recognise that the industry has changed."

While Walsh said the same was true of Air Berlin that "didn't respond to the change in the competitive landscape", Monarch he had more sympathy for, as it was "caught between a number of challenges".

Monarch had been targeted, he said, facing increaed competition on some of their core routes and destinations.

Walsh also discussed the prospects for IAG's new low-cost, long-haul airline Level, which is operating out of Barcelona.

At present, he said the next port of call for the carrier is between Paris and Rome, and the plan will be to focus on "underserved markets", but added that the UK will be a market that IAG looks at for Level in the future.

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