Ba to merge with qantas?

British Airways and Australian carrier Qantas are exploring the possibility of a potential merger, in which a dual company would be created and listed in both London and Australia...

Talks between British Airways and Qantas, which already share costs and revenues on the so-called Kangaroo Route between Britain and Australia, have now been confirmed.

Shares of British Airways rose about 15 per cent in London on confirmation.

"This is an exciting step toward creating the first truly global airline," Willie Walsh, the British Airways Chief Executive, said.

Under current Australian law, Qantas must be at least 51 per cent Australian-owned and any individual foreign airline can only own up to 25 per cent of it and only a total of 35 per cent may be owned by foreign airlines.

But, the Australian Government has now indicated that it may well relax the rules on foreign ownership.

Transport Minister Anthony Albanese has proposed that the rules be changed so that while 51 per cent must still be Australian-owned, the remaining 49 per cent may be owned by a single foreign airline.

The future of Qantas has been uncertain since a £4.8 billion bid for it from Airline Partners Australia (APA) collapsed last year due to lack of support from shareholders.

Shares in the national carrier Qantas rose after the talks with BA were announced. They surged almost 10 per cent in early trade before closing up at 4.4 per cent.

The airline sector has been hit by the high fuel prices earlier in the year and is particularly vulnerable to the economic downturn.

Jet fuel is distilled from crude oil, which since reaching historic heights four months ago has plunged to trade at only 46 American dollars yesterday.

Brian Boyd, National Officer at Unite Trade Union in the UK, said, "This announcement is further evidence of the current difficulties within the civil aviation industry. BA is continually searching for consolidation partners."

BA held a stake in Qantas for 11 years until 2004, when it sold its 18.25 per cent shareholding to raise money to pay off some of its debt.

BA warned of the possible Qantas merger that there was ‘no guarantee that any transaction will be forthcoming.'

Other possible partnerships

There is an EU investigation underway into a proposed revenue sharing deal between BA and American Airlines, which would allow them to agree fares, routes and schedules together.

BA also said that its discussions with the Spanish flag-carrier Iberia are also still continuing.

Ryanair has renewed its bid for the Irish airline Aer Lingus. The German airline Lufthansa has made advances toward Austrian Airlines and BMI of Britain, while British Airways itself is already working on a merger with Iberia of Spain and is awaiting antitrust approval for a planned alliance with American Airlines.

Picture by addallahh