Govt vows to keep Qantas Australia-based

3 Dec 2008, 10:06 pm   -   Source: AAP
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The federal government has vowed to never let Qantas fall into international hands as the flying kangaroo embarks on merger talks with British Airways.

The federal government has vowed to never let Qantas fall into international hands as the flying kangaroo embarks on merger talks with British Airways.

After months of rumours the airline early Wednesday morning confirmed it was in detailed merger talks with BA in a bid to ward off the ravages of the global financial crisis which have already knocked 30 airlines out of the sky.

The reaction was predictably patriotic in parliament with Transport Minister Anthony Albanese promising the "national interest" would be the government's primary concern in approving any merger.

"Qantas must remain Australian based and majority Australian owned and that will not change," Mr Albanese told parliament.

He was heavily backed by unions.

Law prevents foreigners owning more than 49 per cent of the once government owned airline.

It's a law that has bipartisan support.

Treasurer Wayne Swan confirmed any merger would be studied carefully by the Foreign Investment Review Board.

On Tuesday, Mr Albanese said the government was open to the possibility of increasing the amount of the airline a foreign operator or individual could buy but would not be budging on the overall cap.

For BA the merger will be another major project on the boardroom table of an already busy airline. The carrier is considering a merger with Spain's Iberia and a stronger alliance with American Airlines.

Qantas is seeking the merger, in part, because of the dramatic overhaul of aviation this decade. The emergence of super planes like the A380 has been both a blessing and a curse for the flying kangaroo.

It can take more passengers and uses less fuel, but the A380 also means other airlines, which previously didn't bother looking at possible routes Down Under, can consider flying to Australia.

Aviation expert Geoff Thomas said the Qantas plan was not a genuine merger.

"There would be some backroom synergies. You might share maintenance, IT, reservations (but) a lot of the synergies you would get from a merger are already in place in the One World Alliance," Mr Thomas said.

BA held a 25 per cent stake in Qantas for much of the 1990s but slowly divested itself of the holding.

Qantas' last attempt at a financial makeover ended in spectacular fashion when a private equity bid failed in its final hours.

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