DID British Airways check Quantas' legal standing in Australia before entering into negotiations towards a merger? Australian law mandates that Quantas must be at least 51 per cent Australian owned and its headquarters, stockmarket listing and major facilities must remain in Australia. Yesterday BA said that the merger talks had broken down because Quantas would not agree to its proposal for a 50-50 deal and wanted a majority stake and agreement that the merged airline's headquarters should be in Australia. Of course, there may have been other reservations in Quantas' mind - BA's 1.7 billion pound pension fund deficit, perhaps. Where does BA go looking now for a partner? Time is passing. The extended talks with Iberia have increasingly seemed like a long engagement that may never lead to marriage. Iberia cannot have been pleased when BA caught the eye of Quantas but that Antipodean fling is now over. Who else is there?

Lufthansa is content and Air France has got into bed with KLM. Alitalia? Probably not, what with one thing and another. One of the appeals of a tie-up with Quatas for BA was the access it would give to Asian markets. Much the same can be said of Iberia in relation to Latin America. BA should make up its mind before it finds there are no possible partners left at a time that sharing costs and routes are a necessary response to reduced demand for international travel.


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