High oil prices make new wave of consolidation likely among airlines
The airline industry should expect a new wave of consolidation, according to a new report by KPMG, as high fuel prices and low interest rates combine to create a need for economies of scale, making the conditions ripe for mergers and acquisitions. Virgin Atlantic could be first on the block as Sir Richard Branson, the airline’s main shareholder, has said that he is now ready to relinquish control. Deutsche Bank has launched a strategic review.
“We saw an upturn in transport M&A last year; we’re expecting more this year. Having survived the downturn, many companies will be focusing externally again,” says the head of KPMG’s transport division.
Cutbacks in state spending will also drive privatisation deals in the transport sector, with key selloffs scheduled in Spain, the UK and Ireland.