The International Airlines Group (IAG), owners of British Airways and Iberia, reportedly may take a stake in American Airlines, which is currently undergoing a reorganization under U.S. bankruptcy law and is the possible target for a bid by US Airways. A report in the Financial Times cited remarks by IAG CEO Willie Walsh expressing interest in such a deal.

Walsh reportedly said that a small stake in American could reinforce American's participation in the oneworld alliance, which includes American, British Airways, Iberia, Japan Airlines and Qantas. British Airways also has a joint venture with American on North Atlantic flights. At the same time, he also surprisingly voiced strong support for a merger between American, the third-largest U.S. carrier by revenue, and US Airways, the fifth-largest. “If we can make the case that there is additional strategic value to be achieved, then it is certainly something we are prepared to do,” Walsh said.

With American seeking to reduce its operating costs and debt load through the Chapter 11 bankruptcy process, several potential suitors are circling. Delta Air Lines, the second-largest U.S. carrier, has been considering the case for a bid for American -- and such a scenario, if realized, could hurt IAG. Delta is a leading member of SkyTeam, another global airline alliance, and a deal with American might result in its exit from Oneworld and the joint venture with BA.

Walsh said regulators would almost certainly block a combination between Delta and American. In making the argument for a potential investment by IAG in American, he highlighted how Delta last year bought a 5 percent stake in Gol, the Brazilian airline, for $100 million. The deal gave Delta a seat on Gol’s board and also involved an enhanced commercial partnership between the two airlines, partly based on codesharing. The transaction was seen by analysts as ending the risk of Gol joining Oneworld. Walsh said Delta’s investment in Gol “is a very good example of where a small stake -- a real strategic investment -- can have benefits well beyond the scale of the investment”.

Walsh also said he saw “definite attractions” in a combination between American and US Airways. US Airways has said if it combined with American, the merged entity would seek to remain in oneworld. US Airways is a member of Star Alliance, another global airline alliance. The combined carrier would have a bigger network, and U.S. airline consolidation has provided better pricing power to the remaining players.