Rocketing oil price leaves British Airways on the runway

The terse one-line statement from British Airways that it is “exploring opportunities” with American Airlines and Continental is confirmation of just how worried the three are by rising oil prices.

AA and Continental announced huge first-quarter losses and BA is expected to reveal its second profit warning of the year next month as crude remains persistently high.

Airlines are going bankrupt on almost a daily basis and the big carriers are looking to cut other costs through mergers and takeovers – evident in Delta’s tie-up with Northwest. A merger of BA, AA and Continental would provide plenty of scope for rationalisation while also dominating the transatlantic skies – which is one reason why it is unlikely to happen. Sir Richard Branson, president of Virgin Atlantic, has already fought two attempts by BA and AA to get together and he is ready to bring his considerable political and consumer influence against this latest proposal.

The Times