Broker snap: BA merger unlikely until conditions settle

Things are so volatile in the airline business at present that British Airways declined to give any trading guidance for the current financial year with its 2008/9 results announced on Friday, making it difficult for analysts to get a handle on the company's prospects.Charles Stanley is playing it safe and maintaining its 'hold' recommendation after the UK airline announced results that 'were as bad as expected'. 'Earlier guidance (issued at Investor Day in March) was for a 5% decline in revenue in 2010. However, guidance has been abandoned with the preliminary results,' the broker noted. A 17.7% decline in premium traffic in April, the first month of the company's financial year, does not bode well for the year as a whole, the broker said, although costs should be lower as a result of action taken by British Airways' management plus the much lower oil price.Some investors are pinning their hopes on merger activity gingering up the company's share price but with 'uncertainty over costs, capacity and pensions any merger is unlikely until trading conditions become more settled. In 2010,' the broker believes. Bay Capital