Fri, Dec 19, 2008
Airlines Couldn't Agree On Ownership Split
The specter of British Airways displacing Delta as the world's
largest airline has disappeared, at least for now. British Airways
has ended
talks with Australia's Qantas after the two
companies couldn't agree on the ownership split, according to BA
spokesman Tony Cane.
Bloomberg notes one complicating factor in the talks was
valuation of each side. British Airways has about 30 percent more
revenue, but Qantas has a market valuation about 10 percent higher
than BA's. The UK's largest airline is also carrying considerable
pension debt.
British Airways used to own a 25 percent stake in Qantas, but
completed selling it off in 2004. The global economic recession has
apparently brought second thoughts, and BA was also reportedly
under pressure from Spain's Iberia Airlines to strike a deal with
Qantas as a condition for further consolidation with the Spanish
carrier.
The failure of the talks with Qantas appears to leave British
Airways short on potential merger partners for now. Geoff van
Klaveren, an analyst at Exane BNP Paribas in London, has rated BA's
stock at "underperform," and was not excited about the merger
idea.
"The bottom line is that there probably weren’t many
synergies," he said. "This means BA is now running out of options
in the consolidation race."
Iberia has so far had no official comment on the collapse of the
talks between BA and Qantas. Officials of the Spanish carrier
reportedly had concerns similar to those of Qantas execs, namely
pension debt and post-merger control.
The combined carrier would have boasted $24 billion in sales and
almost 500 planes.
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