BA and Qantas merger talks fail

British Airways and Qantas today said they had failed to reach agreement on a potential merger.

The pair revealed earlier this month that they were in discussions about joining forces through a dual-listed company structure.

But in a statement today, BA and Qantas said it had not been possible to come to an agreement over the key terms of the merger. They did not provide further details.

Both airlines already jointly market, or codeshare, on some routes and had pledged to retain their identities through any tie-up.

BA is still in separate talks with Spain's Iberia in a move that could eventually lead to a tie-up with giant US carrier American Airlines.

BA held a stake in Qantas from 1993 to 2004 but sold its 18 per cent in 2004, while continuing its codeshare agreement.

Today's statement said: "British Airways and Qantas Airways are announcing that after detailed discussions about a potential merger, talks have ended.

"Despite the potential longer term benefits to both British Airways and Qantas, the airlines have not been able to come to agreement over the key terms of a merger at this time.

British Airways and Qantas will continue to work together on their joint business between the UK and Australia and as part of the oneworld alliance."

Talks over a BA-Qantas tie-up first emerged on the day the Australian government released a transport green paper considering whether to overhaul foreign ownership rules in Qantas that currently limit a single foreign holding to 25 per cent and 35 per cent in total for all foreign airlines.

The prospect of consolidation in the airline sector has been fuelled by sky-high oil prices and the prospect of a deep global recession. BA recently announced a 90 per cent fall in half-year profits and said it was axing services from its summer 2009 schedule.

Qantas - which stands for Queensland and Northern Territory Aerial Services - was formed in 1920. It employs around 37,000 people and flies to 145 destinations in 37 countries.

Qantas has an airline subsidiary, Jetstar, and has just taken delivery of its first Airbus A380 superjumbo.