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BA in merger talks with Qantas
British Airways is in merger talks with Australia's Qantas, it said on Tuesday, adding to various attempts at consolidation in an industry desperate to cut costs in the global economic downturn.
- Reuters
- Published: 23:25 December 2, 2008
London: British Airways is in merger talks with Australia's Qantas, it said on Tuesday, adding to various attempts at consolidation in an industry desperate to cut costs in the global economic downturn.
Shares in British Airways, which had been up 5.1 per cent ahead of the announcement, extended their gains to trade as much as 17.5 per cent higher at a two-month high of 164 pence.
At 1416 GMT the shares were up 11.6 per cent at 156 pence, valuing the airline at around £1.8 billion ($2.7 billion), little different from Qantas's market capitalisation of about A$4.4 billion ($2.83 billion), according to Reuters data.
BA also said in a statement yesterday that prior merger talks between it and Iberia to form the world's third largest airline were continuing.
"BA has previously said it is determined to be at the forefront of industry consolidation. It is in talks with Iberia and American and this is of a piece with those efforts," Blue Oar Securities airline analyst Douglas McNeill said.
"They are out to create a global player, which is an audacious goal that would be difficult for any management team to pull off," he said.
In 1993 BA acquired 25 per cent of Qantas in the first step towards privatisation of the Australian carrier but sold out 11 years later.
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