Created out of the merger between British Airways and Iberia in 2011, IAG has, in the years since then, also taken control of Ireland’s Aer Lingus, and Vueling, a low cost Spanish carrier based in Barcelona to create an airline conglomerate. 

The mergers came with all the standard-issue corporate guff about synergies, cost-savings, global reach, and branding.

Bigger was better, ran the familiar argument. 

In fairness, there probably have been some advantages in terms of buying power (although Boeing was probably always willing to take a call from BA if it wanted some new planes), code-sharing, and pooled resources and expertise. 

It definitely has not been a disaster in the way that many mega-mergers have been. That said, it hasn’t been a great success either. 

Neither of the main brands has seen its market position transformed, and there are lots of worrying signs that BA has in fact deteriorated under IAG’s control. It is hard to see how a demerger would make it much worse. 

Next, the EU is clearly intent on returning to a nationalistic aviation policy taken straight out of the 1970s. 

AirFrance-KLM is now effectively under state control, with the government owning 29pc. So is Lufthansa, with a 20pc state shareholding and a block on foreign control, and of course the new Italia Trasporto Aero, which in so far as anyone can tell is just Italy’s perpetually loss-making Alitalia with a new lick of paint on the tail-fins. 

Competition policy has been put to one side – as long as you are a carrier based on the Continent. 

And it is already clear that governments in Berlin, Paris and Rome will do everything they can to support the airlines they have invested so much money in, and that the regulators in Brussels will back them in that. 

Contrast this to the response of EU regulators in nixing IAG’s planned acquisition of Air Europa in December. 

The UK should be responding in kind. 

We don’t want to bailout our airlines, nor should we play petty, nationalistic games, but we should also be using assets such as landing slots at Heathrow to promote our national airline, and using trade agreements to secure its rights elsewhere. 

With IAG controlled from the EU that will be very hard. In effect we will be fighting with one hand (or, come to think of it, possibly two) tied behind our backs. And BA will suffer from that.

HSBC has called this one right. 

IAG may protest, but at some point over the next couple of years the EU is likely to insist that the company breaks itself up and sells off or demerges British Airways. 

It would be easy for the UK to fight that, and to start offering concessions to stop it from happening. 

But why not just embrace it instead? 

A standalone BA, focused on the British and global market, dominating Heathrow and the lucrative Atlantic and Asian routes, might well be revitalised, reinvigorated and re-energised. 

With the backing of the UK Government and freed from EU rules it might even be turned into the world’s favorite airline again.