Euro airlines 'must merge' to survive

Airline bosses are facing tough times

The chief executive of British Airways, Rod Eddington, has told the BBC that he expects dramatic consolidation in the European airline sector.

"I think there will be three major international carriers in Europe," said Mr Eddington on the BBC's Breakfast with Frost, indicating a radical reduction from the 15 or so that exist now.

We are not looking for the government to bail us out

Rod Eddington

And he agreed with last week's comments from the chief executive of Germany's Lufthansa who said that it was likely that only British Airways, Air France and Lufthansa would survive as major players.

Speaking in his first live interview since taking on the job one year ago, Mr Eddington also confirmed press reports that BA has re-opened talks with the Dutch carrier KLM and that it was seeking an alliance with American Airlines.

Consolidation not cash

Mr Eddington was also keen to stress that the government must allow the consolidation to go ahead, rather than simply doling out cash to the stricken airlines.

BA has already cut 7,000 jobs and more could go

"We want and believe that European aviation has to consolidate and we want the British government to work with the people in Brussels, to make sure that happens in a sensible and logical way," he said.

"We are talking to KLM, we are talking to other carriers...to see if there are ways we can work together more closely," he said.

And in regards to a tie-up with American Airlines, Mr Eddington said he hoped the government would be able to deliver an anti-trust immunity before the end of the year.

No hand-outs

The airline chief said that he had asked Prime Minister Tony Blair for support in meeting the additional costs of insurance and security.

But he stressed that he did not want the government to hand out more money to the airlines.

"We want to make sure our government provides a level playing field so that we can compete globally, but we are not looking for the government to bail us out," he said.

But American airlines have already received $16bn (£11.2bn; 17.8bn euros) in state aid, making it hard to see how European airlines could compete without similar financial rescue packages.

Belt tightening

British Airways has already cut 7,000 jobs, but a further reduction in the workforce cannot be ruled out.

"We will survive, but we're going to have to change the way we run our business...we are going to have to tighten our belts - we've begun that process already, there may well be more things we have to do," he said, adding that the necessary steps would become clearer over the next few months.

We will survive, but we are going to have to tighten our belts

Rod Eddington

But he did say that BA would not be pulling out of Gatwick as a cost-saving measure.

And he said that he hoped that he would not have to sell BA's property portfolio in order to raise cash, but admitted that there might be no alternative.

British Airways lost £48m in the week immediately after the 11 September terrorist attacks.

But the real damage to business has come from a decline of over 30% of air travel to North America and the Middle East since then.

Mr Eddington added that the fall-off is worse than during the Gulf War, and said that no one was sure when North American customers would regain their confidence in flying.