British Airways today revealed it was in talks over a potential merger with Australian rival Qantas.
British Airways today revealed it was in talks over a potential merger with Australian rival Qantas.
Shares in BA jumped 14% after the Heathrow-based operator said it was looking to achieve a tie-up through a dual-listed company structure.
BA confirmed that separate merger talks with Spain's Iberia were continuing.
BA said in a statement: "In response to recent media speculation, British Airways confirms that it is exploring a potential merger with Qantas Airways via a dual-listed company structure.
"The discussions between British Airways and Iberia are continuing.
"There is no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate."
Speculation over a possible tie-up with Qantas has surfaced following indications that the Australian government is prepared to review ownership restrictions relating to the Australian flag carrier.
BA sold its 18% stake in Qantas in 2004, having secured a 25% holding in 1993.
There is currently a 25% individual foreign ownership limit, but Qantas could gain more flexibility to pursue a tie-up with a foreign carrier if it only needed to meet the requirement that it is 51% Australian owned.
The speculation over a BA-Qantas tie-up comes on the day the Australian Government released a transport green paper considering whether to overhaul foreign ownership rules in Qantas that currently limit a single foreign holding to 25% and 35% in total for all foreign airlines.
The prospect of consolidation in the airline sector has been fuelled by sky-high oil prices and the prospect of a deep global recession. BA recently announced a 90% fall in half-year profits and said it was axing services from its summer 2009 schedule.
Under the potential Iberia tie-up, both airlines will retain their identities in an attempt to create a giant new European airline.
But rival airline Virgin Atlantic said it feared the deal would increase BA's "dominant" position at Heathrow Airport and that fares would go up.
Talks between the two parties started in August following an approach from Qantas, a spokesman for BA confirmed.
A dual-listed structure would see shares in the merged entity listed on both the London and Australian stock markets.
