Europe: The Ties That Bind

Europe: The Ties That Bind

SWISS, the financially struggling national carrier of Switzerland, has made what company officials call a “strategic alliance” with British Airways, which will result in the absorption of SWISS TravelClub by BA’s Executive Club.

SWISS is surrendering 14 daily slots at Heathrow to the British giant, in exchange for a $37 million credit facility.

In addition to joining the oneworld alliance, SWISS will also implement a codeshare agreement for flights between Heathrow and Zurich, Geneva and Basel.

SWISS told reporters it expects its admission into oneworld to provide an extra $74 million in revenue annually.

TravelClub will gradually be integrated into Executive Club. SWISS customers will earn miles on all oneworld airlines, and points already earned with SWISS will remain valid.

The tie-up surprised many analysts, who expected Lufthansa to move in on the struggling carrier.

Reports indicate that BA may well continue its expansion, with Spanish Carrier Iberia next on the wish list.

Just days after the BA-SWISS union was announced, Air France said it would merge with Dutch carrier KLM, creating Europe’s largest airline, and the third largest airline in the world. Italy’s Alitalia has also expressed interest in joining.

In response, British Airways has threatened European regulators with a possible merger with American Airlines should the KLM-Air France merger be approved.

BA is wary of the potential market dominance that an Air France-KLM-Continental-Northwest-Delta tie-up would produce, particularly since BA’s attempts to cooperate more closely with American have been thwarted in the past.

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