Qantas Airways said last night its talks with British Airways (BA) about a potential tie-up have ended after the airlines were unable to agree on key terms of a merger.
"Qantas Airways and British Airways Plc are announcing that after detailed discussions about a potential merger of thecompanies, talks have ended," Qantas said in a statement.
"Despite the potential longer term benefits for Qantas and BA, the airlines have not been able to come to an agreement over the key terms of the merger, at this time."
Qantas said it will continue to work with the UK carrier on its joint business between Australia and the UK and as part of the Oneworld alliance.
Last week, Qantas' new chief executive Alan Joyce said there were a number of hurdles to overcome in relation to the potential merger with BA, a deal that could create an A$8 billion ($9.6 billion) company.
Joyce said the significant matters that needed to be resolved before a deal could be done included: agreeing to an appropriate merger ratio, resolving issues around BA's pension fund, which has liabilities of around 1.7 billion pounds, as well as the broader economic outlook.
Joyce also said another obstacle to the deal was BA's parallel merger talks with Spanish airline Iberia, adding that only one transaction could take place.
He said at the time that Qantas was not in talks with any other airlines about a potential merger.
However, earlier this week Malaysia Airlines said it had begun talks with various carriers, including Qantas, to form tie-ups including joint ventures.
The airline's chief executive Idris Jala had previously denied reports that the Malaysian and Australian carriers were in merger talks.
Analysts had predicted that a Qantas and BA merger had a 50 per cent chance of succeeding.
"At this stage (we) place less than 50 per cent probability on success unless Iberia defects to another airline," Citigroup said in a client note.
Airlines have been looking towards consolidation to strengthen their position as the global economic crisis, combined with soaring oil prices earlier in the year, have severely crimped travel demand.
Prior to the announcement from Qantas, the carrier's shares closed up 17 cents, or 7.52 per cent, to A$2.43.
