Qantas BA merger off

Qantas and British Airways have been unable to reach an agreement on a possible merger.

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Australia's Qantas Airways and British Airways said today their talks on a planned merger had ended without agreement. "Despite the potential longer term benefits for Qantas and BA, the airlines have not been able to come to an agreement over the key terms of the merger, at this time," Qantas said in a statement. "Qantas and BA will continue to work together on their joint business between Australia and the UK and as part of the oneworld alliance," the statement said.

British Airways confirmed the talks had failed, in a statement issued in London. The two airlines announced early this month they were in talks to create a global carrier worth an estimated A$8 billion (US$5.2 billion US) to help cope with the global financial crisis. The chief executives of the two iconic airlines had been negotiating since August as they battled volatile fuel prices and shrinking passenger demand in a world economy creeping into recession.

But Qantas said last week that the proposed merger was not guaranteed and could stumble over the European carrier's merger talks with a Spanish airline and its pension fund liabilities. Qantas chief executive Alan Joyce, who took on the position last month, said then there were significant issues to resolve. "There is no guarantee that any transaction will be concluded," Mr Joyce said. "We will only proceed with the transaction if we are assured that it will maximise value for Qantas shareholders."

British Airways is already in parallel merger talks with Spain's Iberia, and Mr Joyce said it would be impossible for BA to tie up with both airlines. "BA are conscious, as Iberia are and we are, that only one of the transactions will take place," he said. "That's one of the other issues we have to take into consideration when looking at the transaction." Under Australian law, Qantas must remain at least 51 per cent Australian owned, be headquartered in the country and have a board in which Australian citizens make up two-thirds of the membership - conditions that would be difficult to meet if a three-way merger were attempted.

*AFP