So the news broke today that British Airways and Qantas Airways are in talks to merge companies. Oh joy! The partnership between one of Europe's largest airlines and the biggest airline in Australia would generate about $23 billion in sales per year. At a time when the industry is looking to downsize and cut costs this seems like a wise move. But what does it mean for you? Most likely nothing, but this is just another sign that the worldwide economic recession is crippling the airline industry.
British Airways' stock rose 17 percent during trading in London after announcing that they were in talks with the Aussie airline. This merger would create a company both listed in the U.K. capital and Sydney. Even if the merger goes through, both British Airways and Qantas Airways would retain their own brands.
"It certainly makes sense," said Neil Gynn, an analyst at NCB Stockbrokers in Dublin. "I see it as being very early stages, but the companies have a very strong relationship and would know each other quite well."
Both airlines began discussing this merger after the Australian government declared that it would "ease restrictions" on the ownership of Qantas. British Airways released a statement in response to the "media speculation."
"There is no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate," British Airways said in the statement. While all this speculation is going on, British Airways is keeping themselves busy talking with both Spain's Iberia Airlines about their own possible merger and getting antitrust immunity in order to work closer with American Airlines. So the possibilities are endless!
Meanwhile, somewhere on a private island in the Caribbean, Richard Branson is clinching his fist in anger.