Airlines Couldn't Agree On Ownership Split

The specter of British Airways displacing Delta as the world's largest airline has disappeared, at least for now. British Airways has ended talks with Australia's Qantas after the two companies couldn't agree on the ownership split, according to BA spokesman Tony Cane.

Bloomberg notes one complicating factor in the talks was valuation of each side. British Airways has about 30 percent more revenue, but Qantas has a market valuation about 10 percent higher than BA's. The UK's largest airline is also carrying considerable pension debt.

British Airways used to own a 25 percent stake in Qantas, but completed selling it off in 2004. The global economic recession has apparently brought second thoughts, and BA was also reportedly under pressure from Spain's Iberia Airlines to strike a deal with Qantas as a condition for further consolidation with the Spanish carrier.

The failure of the talks with Qantas appears to leave British Airways short on potential merger partners for now. Geoff van Klaveren, an analyst at Exane BNP Paribas in London, has rated BA's stock at "underperform," and was not excited about the merger idea.

"The bottom line is that there probably weren’t many synergies," he said. "This means BA is now running out of options in the consolidation race."

Iberia has so far had no official comment on the collapse of the talks between BA and Qantas. Officials of the Spanish carrier reportedly had concerns similar to those of Qantas execs, namely pension debt and post-merger control.

The combined carrier would have boasted $24 billion in sales and almost 500 planes.

FMI: www.britishairways.com, www.qantas.com