Struggling European airlines have no choice but to consolidate if they are to stand up to increasing competition from Middle East operators such as Abu Dhabi's Etihad Airways and Dubai's Emirates Airline, says Keith Williams, the chief executive of British Airways.
"I am not surprised Middle East airlines are taking an interest in Europe. The airline industry there is in need of consolidation," Mr Williams said.
"The Middle East carriers have lots of aircraft on order, and they need to fly them somewhere."
In the battle for long-haul, east-bound traffic, Etihad, Emirates and Qatar Airways appear to be specifically targeting the French and German markets, Mr Williams said.
"They're taking an aggressive stance [and] they are aiming at Europe."
British Airways, however, is not threatened by this strategy, Mr Williams said. "Our market share to the Middle East is about 30 per cent, and up on last year. That reflects the importance of London. We operate 60 flights a week from London to the region, and our customers are mostly premium customers, flying point to point."
However, he admitted competition from Gulf states' carriers from British regional airports, such as Manchester and Glasgow, was keen as they tried to snap-up market share aimed at transfer passengers for Asia and Australasia.
His comments came as Jean-Cyril Spinetta, the chief executive of Air France-KLM, told Reuters yesterday that he was "amenable" to talks on cooperation with Etihad, which he said was seeking a "commercial partnership."
Yesterday, an Etihad spokesman declined to comment directly on Mr Spinetta's statement.
"Etihad Airways talks regularly and frequently to many airlines and a range of other businesses from all over the world about issues and opportunities," the spokesman said.
However, on Monday the Etihad chief executive James Hogan told Bloomberg he planned to intensify his strategy of growing passenger numbers via tie-ups with other carriers.
"My strategy from day one was to build strong bilateral relationships with codeshares and stretch my network," he said.
Etihad has 35 partners and is spending US$400 million (Dh1.46 billion) to build stakes in Air Berlin and Air Seychelles and has also looked at Ireland's Aer Lingus Group.
European carriers are struggling, hit by the euro-zone debt crisis and higher fuels prices.
Yesterday, Air France-KLM reported a net loss of €809m (Dh3.93bn) compared with its €289m profit in 2010, and its German rival Lufthansa also posted a surprise full-year loss of €13m on Wednesday.
British Airways' owner IAG last week reported a forecast-beating rise in profit last year to €555m.
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