Merger talks between British Airways and Australian flag carrier Qantas, fell through (See: British Airways, Qantas fail to agree on merger terms) as the two companies could not converge on the size of their stakes in the combined group that would have resulted from the merger.
Reports quoted unnamed sources as saying that talks fell through on account of Qantas' insistence for a 55 per cent stake in the new company, to which BA could not agree.
The collapse of talks two weeks after negotiations were made public, was more or less expected, as was evident from the well-documented hurdles it faced along the way, along with Australia's foreign ownership rules.
In a conciliatory note, both airlines said that relations between them remained cordial and they would continue to co-operate in the OneWorld alliance.
BA is also in merger talks with the Spanish carrier Iberia, and is pursuing is an alliance with American Airlines that is facing regulatory hurdles. A three-way tie-up between BA, Qantas and Iberia would have created a next next generation global super-airline, the likes of which are being forced into existence by the exigencies of the credit crunch and global recession.
BA started talking to Iberia in August 2008. Reports said that they would most probably not conclude before next summer as Iberia's investors are wary of BA's ballooning pensions deficit.
In September, BA had said that the deficit was £1.74 billion, which was more than its market capitalisation, and that prompted Iberia's largest shareholder, Caja Madrid, to call for the Spanish carrier to hike its share to a larger holding in the combined group. BA also denied that its pension problems were part of discussions with Qantas.
Airlines are facing mergers to build economies of scale to survive has been termed as "the worst trading environment the industry has ever faced" by BA chief executive Willie Walsh. The International Air Transport Association (IATA) has also predicted combined losses for the industry of up to $5.2 billion (£4.8 billion) this year. Around 30 airlines have gone bankrupt since January on account of fuel costs and plummeting load factors.
In Europe, Air France-KLM is looking to pick up bankrupt Italian flag carrier Alitalia while Lufthansa, which has already bought Swiss International Air Lines, is trying to acquire Austrian Airlines. The third M&A cluster is being shaped by BA.