BA And Qantas Wanna Be Mates

The economic slump is prompting airline consolidation on a truly global scale. On Tuesday, British Airways confirmed it was in merger talks with an airline on the other side of the world, Australia's Qantas, adding yet another potential tie-up to its list of deals under discussion with American Airlines and Spain's Iberia.

The merged entity would have a "dual-listed" company structure, said British Airways (other-otc: BAIRY - news - people ), though it stressed that there was no guarantee a deal would be forthcoming. It also said that talks were still ongoing with Spanish airline Iberia, referring to a proposed all-share merger plan that was publicly confirmed back in July. (See "BA, Iberia Fly Closer Together.")

"This continues the trend of global consolidation to save costs and maximize revenues," said Neil Glynn, an analyst with NCB Stockbrokers. He told Forbes.com there would be synergies from aircraft purchases and maintenance, as well as potentially from routes between Britain and Australia. The two airlines co-chair flights between Britain and Australia, known as the "kangaroo route."

The Australian press had speculated that Qantas (other-otc: QUBSF - news - people ) and British Airways were in equity-swap talks, prompted by the Australian government's proposal on Monday to relax ownership restrictions on Qantas. The government now seeks to stop foreign airlines owning more than 49.0% of Qantas, whereas previously the limit was set at 35.0%.