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British Airways (BA) has confirmed reports that it is exploring a potential merger with rival Qantas.
"In response to recent media speculation, British Airways Plc confirms that it is exploring a potential merger with Qantas Airways Limited via a dual-listed company structure," BA said in a statement.
Qantas says it will make a statement on the merger talks later this morning.
Following BA's announcement of a potential merger with Qantas, the share price of the British airline soared.
Shortly before BA's announcement there were reports the two airlines were in advanced merger talks to create an A$8 billion global carrier.
The two airlines would each retain their names and branding under the agreement, an Australian Financial Review report said.
The Federal Opposition yesterday expressed concern about Government moves to relax ownership restrictions on Qantas.
The Government's aviation green paper released yesterday proposed lifting the 25 per cent limit on individual foreign ownership and the 35 per cent limit on ownership by a foreign airline.
But it does recommend maintaining the 51 per cent Australian ownership provision for the national carrier.
The aviation sector is seeking consolidation as airlines fight for survival having been crippled by record high oil prices and as the world faces a deep recession.
Qantas last week announced further cuts to its capacity, saying the global financial crisis was continuing to dampen passenger demand.
Chief executive Geoff Dixon - who has since handed over the reins to incoming chief executive Alan Joyce - said lower demand for flights, particularly on international routes, would mean Qantas' profit before tax for the fiscal year ending June 30, 2009 would be about $500 million.
Meanwhile, BA has confirmed merger talks with Spanish airline Iberia are continuing.
In July, BA and Iberia announced they were holding merger talks to create the world's third largest airline in terms of income.
Recently BA chief executive Willie Walsh also said his airline had expressed strong interest in a commercial alliance with troubled Italian carrier Alitalia.
- RADIO AUSTRALIA
