A merger of Qantas and British Airways wouldn't pass muster without control of the "Flying Kangaroo" remaining in Australia, officials said yesterday as Qantas shares surged on hopes a deal would see it emerge as a stronger competitor to big regional rivals such as Singapore Airlines.
The Australian government greeted with caution news of talks between BA and Qantas Airways ?? dubbed the Flying Kangaroo because of its bright red logo.
On Tuesday, both airlines said they were exploring a "potential merger" with "a dual-listed company structure" in which each company would retain its name and branding.
"We haven't had a formal proposal put to us, so all I can do is to indicate the government's very strong view that the Flying Kangaroo remain majority Australian-owned and based," said Treasurer Wayne Swan.
Other government officials agreed a merger could ensure Qantas remains competitive, but any deal would have to be in the national interest.
Transport Minister Anthony Albanese said a merger would probably have to be approved by the Foreign Investment Review Board.
Neither BA nor Qantas - already partners in the 10-airline Oneworld global alliance - provided any further details on the structure of a potential deal. Both said there was "no guarantee that any transaction will be forthcoming."
BA said talks began in August after it was approached by Qantas, Australia's largest airline.
Qantas shares were up 4.4 percent at A$2.35 (US$1.51) yesterday after surging as much as 9 percent. British Airways closed 12.5 percent higher at 157.10 pence (US$2.33) in London trading on Tuesday.
Qantas has some 38,000 employees in Australia.
