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Qantas will stay true blue despite possible merger with BA
QANTAS has pledged it will still call Australia home despite confirming it is in advanced merger talks with British Airways to form an $8 billion global carrier.

The deal would result in a merged group listed on both the London and Sydney share markets. Each would retain its national identity.

Experts believe the mooted merger, which would create the world's second-largest airline, would be advantageous to passengers but lead to job losses at Qantas.

John Rolfe's blog: Lower fares matter more than Aussie ownership

To pull off the deal, a new holding company would be formed with each airline owning half, mirroring the structure used in the merger of Air France and KLM.

It is also a corporate structure that may allow Qantas to bypass its new foreign ownership cap of 49 per cent.

Sources close to the deal told The Daily Telegraph the cost savings would help insulate the airlines against the economic downturn that has crippled the aviation industry.

But where there are synergies and cost savings, there are job cuts.

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"Synergies equal job losses. I'm yet to find any corporate CEO when asked the question, 'Will there be synergies?' and they proudly answer, 'Yes', only to deny there will be any job losses," one source said.

"There shouldn't be any job losses at an operational level, because the airlines should continue to fly the same amount of services. The job losses will come at headquarters."

The Daily Telegraph understands British Airways is not the only carrier Qantas is in merger talks with.

It has been widely speculated it could forge links with either Air New Zealand or Singapore Airlines.

Both Qantas' incoming CEO Alan Joyce and his predecessor Geoff Dixon have voiced the need for the airline to consolidate with a peer.

There remains a strong possibility all four airlines could consolidate into one aviation superpower.

One Qantas source said the airline is in no rush to secure a merger with British Airways and will walk away if a deal that benefits Qantas shareholders cannot be struck: "If (they) don't think it is right . . . (they) will walk away from it."
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