Qantas boss says BA deal in doubt

The merger talks were announced last week

Qantas has warned that merger talks with British Airways could fail because of the UK carrier's potential tie-up with the Spanish carrier Iberia.

BA is currently in merger talks with both the Australian and the Spanish airlines.

Qantas chief executive Alan Joyce said there was a reasonable chance that the deal would not go ahead.

He also revealed that the talks had only been announced because the news had been leaked.

"There's absolutely no guarantee that a transaction will be forthcoming," Mr Joyce said.

Whatever happens, Qantas will remain majority Australian-owned, the vast majority of employees will always be Australian, and Australia will remain our headquarters

Alan Joyce, Qantas chief executive

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"That's why I think we felt that the leak was a bit premature."

He also identified BA's current pension liabilities, which stand at about �1.5bn ($2.2bn) as a possible hurdle for the talks.

The talks come amid growing consolidation in the troubled aviation industry which is suffering as the global financial and economic crisis is hitting demand for air travel.

Consolidation

After the news was leaked last week, the firms confirmed that they were considering a merger through the creation of a dual-listed company, so it would be listed in London and Australia.

However, no other details were disclosed.

Mr Joyce sought to allay the concerns of some Qantas investors and the Australian government that the majority of the company's shares would be held by Australian investors.

Under current Australian law, Qantas must be at least 51% Australian-owned.

Any individual foreign airline can only own up to 25% of Qantas, and only a total of 35% may be owned by foreign airlines.

"Whatever happens, Qantas will remain majority Australian -wned, the vast majority of employees will always be Australian, and Australia will remain our headquarters," Mr Joyce said.

At the same time, BA is also in merger talks with the Spanish carrier Iberia.

It is understood that only one deal will go ahead.