Qantas and British Airways in $8 billion merger talks

Australian icon Qantas has revealed it is in advanced merger talks with British Airways over a merger deal that could create a $8 billion holding company that would be listed on the Australian and British stock exchanges.

Australian icon Qantas has revealed it is in advanced merger talks with British Airways over a merger deal that could create a $8 billion holding company that would be listed on the Australian and British stock exchanges.

Under the deal, both companies would retain their brand and national identity, but would share resources and extract cost savings across the wider group.

But the deal would need to satisfy several conditions under Australian law, including requirements for the company to be 51% Australian owned, retain an Australian headquarters and keep an Australian chairman.

Qantas says any deal would include its discount carrier Jetstar and its lucrative frequent flyer program.

It has been reported that the airlines have been in talks since last August, while BA has also been in talks with Spanish airline Iberia about a possible tie-up.

A three-way deal between BA, Iberia and Qantas would create the world’s biggest airline with combined scheduled passenger kilometres flown of almost 270 billion a year, comfortably overtaking American Airlines on 222.8 billion.

Qantas and BA have a strong history. BA acquired a 25% stake in Qantas in 1993 but sold out in 2004.

Despite the fact any deal will take months to complete, Qantas shares have jumped more than 8% in early trade.

Investors may be betting the announcement of the merger talks could spur other potential suitors to emerge seeking a slice of Qantas.