Qantas could face competition on the lucrative Sydney to LA route

The comments of Qantas chief executive Geoff Dixon came a week after the Australian government said the airline could merge with Singapore Airlines.

Mr Dixon said such an idea was purely hypothetical at this stage, but that an "association" with another airline was needed in the current aviation climate.

He added that any move would see the Qantas name remain.

Mr Dixon said he believed any future merger or association would most likely involve two brands and dual listings.

Qantas is considering a merger due to the tough trading conditions hitting the global airlines, caused in the main by recent sharp increases in the price of aviation fuel.

Competition threat

His comments came as the Australian government continues to consider whether to relax the current rules preventing overseas firms from taking over Qantas.

At present, a foreign airline can only own 25% of Qantas, rising to 35% for a group of overseas carriers.

Mr Dixon said on Sunday that Singapore Airlines would make a good partner, but added that so would other carriers such as British Airways, Hong Kong-based Cathay Pacific and Air New Zealand.

Plans for an earlier alliance between Qantas and Air New Zealand fell through in 2003 after it was rejected by the New Zealand government.

Qantas is facing the threat of increased competition on one of its key routes - Sydney to Los Angeles.

At present only it and American carrier United Airlines offer the direct flight between Australia and the US, but the Canberra government is now considering opening up the route.

Singapore Airlines has already applied to fly between Sydney and Los Angeles, and budget carrier Virgin Blue also wants access.