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Qantas confirms possible British Airways merger

Business Materials 3 December 2008 07:11 (UTC +04:00)

Qantas Airways Ltd confirmed Wednesday that it was in talks with British Airways plc (BA) on a possible merger that would see both iconic brands surviving and dual stock exchange listings, dpa reported.

The negotiations come four years after BA sold a 25-per-cent stake in Qantas that it picked up when the carrier was privatized in 1995.

Treasurer Wayne Swan said that a merger would need the blessing of the Australian government, because current regulations restrict foreign ownership to 49 per cent and individual shareholdings to 25 per cent.

"Our bottom line is that Qantas remains in majority Australian ownership," Swan said.

Shaw Stockbroking analyst Brent Mitchell told national broadcaster ABC that the status quo was not sustainable.

"Certainly the competing airlines such as Emirates, Singapore Airlines, have both different ownership structures and different operating cost basis, and Qantas needs to adapt to be able to compete with those certainly on the global long haul routes," Mitchell said.

Opposition Liberal Party transport spokesman Wayne Truss said he had reservations about a proposal from the government to lift the 25- per-cent limit on individual foreign ownership and the 35-per-cent limit on ownership by a foreign airline.

"British Airways once had a significant shareholding in Qantas, and that did not work, and in the end BA sold down that shareholding in the interest of both airlines," he said. "We'd need to know why this deal is better than the arrangement that was proposed previously and, most importantly, why it's better for Australia."

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