BA Qantas merger greeted cautiously in Australia

Control of the "Flying Kangaroo" would have to remain in Australia, officials in the country said on Wednesday.

Travel Insurance News - 04/12/2008

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Shares in Qantas surged on Wednesday on news of a potential merger between British Airways and Qantas, which is seen as a way for the Australian national carrier to become a stronger competitor to other major regional carriers.

Unions representing the airline’s workers and the Australian government greeted the news of merger talks with caution.

Reports from both airlines on Tuesday indicated that they were discussing “potential merger” that would be accomplished "via a dual-listed company structure," allowing each carrier to retain its name and branding.

"We haven't had a formal proposal put to us, so all I can do is indicate the government's very strong view that the Flying Kangaroo remain majority Australian owned and based," said Wayne Swan, Qantas treasurer.

Some government officials agreed that a merger with BA could help Qantas gain a competitive advantage, but stress that any deal would have to be clearly in the country’s best interests. The Australian Transport Minister, Anthony Albanese, commented that a merger would most likely require the approval of the Foreign Investment Review Board.

Qantas and BA are already code-sharing partners in the oneworld alliance, and have provided no further details regarding their discussions or a potential deal structure. Reports from both have indicated that there is "no guarantee that any transaction will be forthcoming."

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