British Airways, IGA Denies It Has Been In Ownership Talks With Finnair

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British Airways, IGA Denies It Has Been In Ownership Talks With Finnair

November 12, 2015 - A Finland news outlet, the Kauppalehti, a business daily reported in the news that British Airways' parent company, International Consolidated Airlines Group (IAG) are in ownership talks with Finland's Finnair Airline.

Kauppalehti reported an IAG source had indicated British Airways owner and Finnair had talks and news could soon follow on those discussions and ownership arrangements.

Due to the speculations of the sale of Finnair, Finnair socks today rose as much as 6 percent. However, IAG denies such talks took place, a spokeswoman for IAG said "We haven't been in any discussions with Finnair".

A Finnair press release stated, "Finnair notes that there has been speculation in the media today regarding a potential bid for Finnair by British Airways or IAG. Finnair is not active, and is not aware of its shareholders being active, in any such negotiations".

Finnair is publicly and privately owned, the company's major shareholder is the government of Finland, with 55.8% of the shares. Finland's Prime Minister, Juha Sipila said, he had not prepared to restructure Finnair's ownership although the government would discuss the issue in the coming months.

The Prime Minister further stated, "The company itself surely holds different discussions and negotiations. At this point, (state majority ownership) is the effective policy and nothing else has been decided." IGA currently owns Aer Lingus, British Airways, Iberia and Vueling Airlines. The company has led the fight to consolidate Europe's airline industry but it claims that there are no acquisition proposals on the horizon. Although the company did say it wanted to develop a closer relationship with LATAM Airlines.

There are public and private talks that Finland should divest its stake in Finnair and make way for private alliances. Finnair as had a hard time in the past competing against Europe's discount carriers. The company has also had a number of labor disputes resulting from cost-cutting measures in an effort to compete with these discount carriers. In 2003, the company employed 9,981 employees, from that time on the company had been able to reduce that number (2014) to 4,981.

However, the company now appears to be on track to turn a profit after deep cost-cuts and a focus on Asian routes. The company has set up routes to Bangkok, Beijing and Shanghai and to add services to Hong Kong and Singapore in 2016. The company also firmed up with Airbus to 8 Airbus A350-900 aircraft with deliveries to begin in 2018. The company operates 72 aircraft with the majority being aircraft manufactured by Airbus. The company has an excellent safety record.