British Airways today announced audacious plans to merge with Qantas, the Australian airline.

Merger talks between the two highlight the sense of crisis in the industry, say analysts, with BA already in merger talks with Iberia, the Spanish flag carrier, and in separate marketing alliance talks with American Airlines.

By trying to pull off so many deals at once the airline is aiming to take on key European rivals Air France and Lufthansa. The potential for a merger with Qantas opened up yesterday after the Australian government said it would waive rules which limit foreign ownership of Qantas's stock to 25 per cent.

BA moved quickly before Asian rivals such as Singapore Airlines launched an offer. It has been an open secret for some time that BA has wanted to cement links with worldwide allies such as Qantas, which is part of the Oneworld alliance of airlines with reciprocal seat-selling and marketing arrangements. However, news of BA's move to pull off a £6 billion three-way merger with Qantas and Iberia simultaneously reflects the depth of the airline crisis, and the pace at which industry consolidation is expected.

The crisis in the industry has already seen more than 30 airlines collapse this year, and is expected to see carriers post billion-dollar aggregate losses for this year. Lufthansa last month took control of BA's main UK rival bmi. The statement from BA sent its stock soaring 11 per cent up 15.9p to 155.6p.

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