Malaysia seens as good fit for Qantas
From today's Weekend Australian . . .
Steve Creedy, Aviation Writer The Weekend Australian| December 20, 2008
QANTAS may pursue Malaysia Airlines following the demise of the Australian carrier's $8 billion merger plans with British Airways.
Merger talks between Qantas and BA ended on Thursday night with failure to agree on a merger ratio.
The market appeared unperturbed by the news, pushing Qantas shares up 21c to $2.64.
Qantas had wanted majority ownership in the deal, reflecting its bigger market value, but BA was not prepared to become a junior partner.
The two had been proposing a dual listed company that would keep both airlines as separate brands, with headquarters in both London and Sydney.
But the deal -- which received a cool reception from analysts, the Australian Government and unions -- faced a number of significant hurdles.
These included governance and the structure of the BA pension fund and its liabilities, currently put at $4 billion.
The airline's management is also understood to have been split on the BA deal with those who supported it seeing the failed deal as a lost opportunity.
The end of merger talks leaves Qantas looking for a new partner in a climate where the opportunities could start to diminish as international aviation is liberalised.
Centre for Asia Pacific Aviation executive chairman Peter Harbison said Qantas would need to find a partner before it became marginalised in the push to consolidate. Mr Harbison said a deal with Malaysia Airlines, run by savvy ex-petroleum industry executive Idris Jala, appeared the most likely partnership option in Asia.
Qantas held unsuccessful exploratory talks with Malaysia earlier this year and executives say it does not have any active merger discussions on the cards at this stage. The Malaysians have since indicated they are still willing to talk.
"I think that could be quite an effective operation," Mr Harbison said. "Really, get Jetstar installed there and you are well into Asia.
"But then again, you have still got to do the deal and Idris is no pushover."
Mr Harbison said a merger with Singapore Airlines, often touted as a good match, was unlikely because of questions of control and potential competition issues.
He believed another possibility often raised, Cathay Pacific, was also unlikely, as were Thai Airways, Garuda, Philippine Airlines and the Chinese carriers.
However, he did not rule out a possible partnership with another European carrier or Japan Airlines in the longer term.
"They have certainly run the flag up the pole and because everybody at the moment is chasing around looking for dance partners before the music stops, it is an important activity to be involved in," he said.
"You have to do something now or your options will be abbreviated."
Sources close to Qantas also suggested Malaysia was the most likely match for the airline in this region.