Perhaps it would make good sense for a big Pacific-based carrier to merge with an Atlantic-based one. But perhaps not.
British Airways is considering a merger with Qantas. According to the FT, "This is an exciting step towards the creation of the first truly global airline," said Willie Walsh, BA chief executive.
The plan comes about a year too late. The major reason for airline mergers has been to cut costs in the face of rising fuel prices. Now fuel prices are moving down -- and sharply.
The risks of merging large airlines make a long list. Putting together worker pools and cutting benefits often causes strikes. Marrying duplicate reservation IT systems can cause customer booking trouble for months. Consumers get upset and often go to another carrier.
Looking at the history of the industry, it is hard to find an airline merger which was a fabulous success. A number of carriers combined in the 1980s and 1990s only to go bankrupt at the beginning of this decade.
A BA merger with Qantas is too risky to try.
Douglas A. McIntyre is an editor at 247wallst.com.
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