BA in merger talks with Qantas

British Airways is in talks on a possible merger with Qantas that would leave both airlines listed on their respective stock markets but operating as a single business.

The airlines have been in discussion since August following an approach to BA by the Australian carrier. Qantas announced 1,500 redundancies in July and BA will see more than 400 managers depart before Christmas.

BA said the move was driven by desire to create a global airline that would benefit passengers, shareholders and employees. However, consolidation among carriers is being driven by a sharp downturn in traffic due to the recession after a year of crippling fuel prices.

The proposed merger would leave BA and Qantas as separate legal entities with separate shareholders, but a combined balance sheet – with an integrated management and overlapping boards of directors. The pair are already partners in the Oneworld alliance and codeshare on services.

BA also remains in merger talks with Iberia and is seeking anti-trust immunity for a closer tie-up with American Airlines. The Spanish carrier would join a global airline established by BA and Qantas if the deal goes ahead. Iberia and BA would also remain separate, with each holding substantial shares in the other.

A BA spokesman insisted there was no timetable for the talks, saying: “It could happen quickly or drag on.”

BA has previously held a 25% stake in Qantas and had shares in the carrier for more than a decade. It sold its remaining 18% stake in September 2004.


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