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British Airways in merger talks with Qantas

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Associated Press

British Airways and Australia’s Qantas Airways Ltd. said Tuesday that they were holding talks about a potential merger, sparking hopes of consolidation in the hard-hit aviation industry.

Both companies issued statements saying they were exploring a potential merger with each other “via a dual-listed company structure.”

Neither British Airways nor Qantas provided further details. In their statements to the London Stock Exchange and the Australian Securities Exchange, the two companies said: “There is no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate.”

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British Airways’ chief executive, Willie Walsh, has long advocated industry consolidation, arguing that closer cooperation would help airlines cut costs in the current difficult economic climate.

British Airways, the third-largest airline in Europe, is already pursuing a revenue-sharing deal with AMR Corp.’s American Airlines and Spain’s Iberia. It said that its discussions with Iberia on a potential merger were continuing.

British Airways and Qantas are code sharing partners in the Oneworld alliance.

British Airways’ confirmation on the talks came a day after the Australian government disclosed that it planned to increase the level of foreign ownership allowed in Qantas but would not permit a takeover.

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Analysts have been expecting greater consolidation after the global economic crisis combined with soaring oil prices this year to severely crimp passenger demand.

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