British Airways in merger talks with Qantas

December 3rd, 2008 - 1:51 pm ICT by IANS  

London, Dec 3 (IANS) In a bid to tackle the global credit crunch, British Airways (BA) is in merger talks with major international carriers, Australia’s Qantas in particular, to create a global super airline.The merger, if it comes through, will make the combine second only to American Airlines. Incidentally, Delta Airlines and North-West Airlines of the US are also in merger talks and, if they combine, the new entity will become the world’s largest airline.

The talks began in August with Qantas taking the lead. The proposal is for an equity swap to create a company that is dual-listed in both Britain and Australia, as a way to help overcome the considerable legal issues facing the merger of two flag-carriers from different jurisdictions.

The British carrier is also in talks with Iberian Airlines of Spain and has opened a separate line of talks with American Airlines.

A BA spokesperson told The Guardian: “The total combination with Iberia, Qantas and American Airlines would create a global airline. It would provide financial strength, cost efficiencies, linked destinations and benefits for customers and shareholders.”

BA’s plans are part of a massive consolidation in the airline industry as carriers try to seek shelter from sky-high fuel costs and falling passenger numbers.

In Europe, the market is coalescing around three groups.

The largest, led by Air France-KLM, is circling Alitalia, the bankrupt Italian flag-carrier.

The second is led by Lufthansa, which has bought Swiss Air, along with several smaller names, and is in the process of trying to acquire Austrian Airlines.

The third is the BA grouping.

The merger talks come at a time when the International Air Transport Association is predicting combined worldwide losses of about $5.2 billion this year, the highest level since 2004, and some 28 airlines have already gone to the wall.

BA is currently running at 15 percent less capacity than it was last December. The US domestic market is the worst affected so far and some eight percent of capacity has been cut this autumn.

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