Qantas has conceded that talks with Malaysia Airlines about setting up an ultra-premium airline in Asia have broken down because the two airlines have been unable to agree on the commercial terms.
Qantas shares were down 4.5 cents, or 2.6 per cent, in early trading to $1.68, while the broader market was up 0.4 per cent.
In a brief statement today revealing the failure to cement a deal, the chief executive, Alan Joyce, said Asia remained a priority for Qantas and it "continued to explore opportunities in the region, including joint ventures and alliances".
"The transformation of Qantas's international business remains vital," he said.
But he again emphasised that any investment in Asia would be on the basis that Qantas will allocate "minimal capital to such ventures".
The statement today does not give any detail on why the talks have broken down, other than to say the parties airlines were "unable to reach mutually agreeable commercial terms".
But their failure is not a surprise as Mr Joyce emphasised as recently as last month that his plans for a premium airline were "hugely complex", and the hurdles high.
Malaysia Airlines also warned last week that it was "in crisis" following the release of a fourth consecutive quarterly loss.
The plans to set up an ultra-premium carrier were part of a four-pillar strategy aimed at turning around Qantas's international operations.