City & Corporate: In the news ... BA merger mess

Following the controversial link-up with American Airlines and Spanish carrier Iberia, British Airways has set its sights on a merger with Australian carrier Qantas. The news, which broke last week, shocked Iberia and potentially put the skids on that deal. The Sunday Times said the airline is wooing Caja Madrid, a key Iberia shareholder, to convince it of the benefits of a three-way merger. The Observer reported that BA's pension-fund trustees plan to hold up the proposed merger.

- The reaction?

BA chief executive Willie Walsh hailed 'an exciting step towards a truly global airline' and was convinced the Iberia deal would not be derailed. But his positivity wasn't universally shared - Fernando Conre, chairman of Iberia, described the rival proposal as irrational and 'too complex'. The Daily Telegraph said that 'nobody believed' both deals could happen simultaneously, 'particularly when there are so many regulatory constraints'.

- Who are the PR players?

BA's in-house team is led by head of corporate comms Julia Simpson. Brunswick advises BA on its financial PR, but the airline recently took its consumer PR in-house having previously used Porter Novelli.

- What happens next?

Link-ups with American Airlines in the past have floundered at the regulatory hurdle and the Australian government has already demanded any deal with Qantas is a merger rather than a takeover. BA's PR machine will grind into top gear to convince shareholders, governments and industry regulatory bodies of their case, but few in the press give BA much chance of pulling off all the deals.

91.6% - Drop in six-month profits announced in November.