A New Colonialism?
At the height of its power in colonial times, it was once said
the "sun never set" on the British empire. Today, it may soon be
said the sun will never set on British Airways... as the UK flag
carrier confirmed Tuesday it's in merger talks with Australia's
Responding to repeated inquiries by The Associated Press and
others, BA issued a terse statement to confirm "that it is
exploring a potential merger with Qantas Airways Limited via a
dual-listed company structure."
Nick Cunningham, an analyst at Evolution Securities in London,
told CBS Marketwatch that BA once held a 25 percent stake in
Qantas... which it sold in 2004. "They already have a long history
of cooperating on the UK-to-Australia route," he said. "It's
worked, and it could work some more."
A BA-Qantas pairing "certainly makes sense," added NCB
Stockholders analyst Neil Glynn. "I see it as being very early
stages, but the companies have a very strong relationship and would
know each other quite well."
Talks to join forces with the Australian flag carrier are
concurrent with British Airways' ongoing talks to merge with
Spain's Iberia, first announced in July. Those two carriers also
signed an alliance with American Airlines in August, to shore up
the trans-Atlantic market.
All three airlines are now awaiting anti-trust approval for that
agreement... and British Airways has reportedly run into resistance
from Iberia, over concerns about BA's pension liabilities.
Cunningham pointed out BA's talks with Qantas may also be a
psychological ploy of sorts against Iberia. "It also reminds Iberia
that BA has other irons in the fire and to some degree is going to
lead the process," he said.
Regardless of motive, shareholders in British Airways loved
hearing news of the Qantas talks. After seeing their shares plummet
53 percent this year, stock in the British flag carrier rose 15
percent on the announcement.