Air New Zealand would be disappointed if British Airways could pull off a merger with Qantas Airways, ABN Amro Craigs broker Chris Timms said yesterday.
Qantas shares surged yesterday on news that it and BA were exploring a potential merger.
As recently as November 20, the Australian Competition and Consumer Commission rejected a proposal by Air NZ and Air Canada to join forces, saying the deal could hurt Australian consumers.
The ACCC blocked the proposed deal between the two airlines on flights from Auckland and Sydney to Canada.
Earlier, Air NZ failed in its efforts to merge with Qantas, reducing the options for the government majority-owned national carrier.
Qantas confirmed in a statement it was exploring a potential merger with its fellow OneWorld alliance member after a similar announcement by BA which sent the British company's shares soaring in London trade.
Qantas' statement echoed BA's assertion there was no guarantee of any transaction.
"In response to recent media speculation, Qantas confirms that is exploring a potential merger with BA via a dual-listed company structure. There is no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate."
Any transaction would comply with its obligations under the Qantas Sale Act, which stipulates the company must be 51% Australian-owned, keep its headquarters in Australia and have an Australian chairman.
BA had previously held a stake in Qantas but sold its share in 2004, after more than a decade of ownership, to pay debt.
Mr Timms said analysts believed the deal would benefit BA more than Qantas.
BA had high debt and made losses when Qantas had low debt and made profits.
Qantas also gained from an oligopoly on one of the most profitable short-haul routes in the world between Melbourne and Sydney.
Qantas was already reducing capacity by ending the leases of two aircraft and indicating it was grounding about 10 planes next year.
"The airline is looking for an opportunity through leveraging off another company to try and be more profitable in difficult financial times.
"I don't know how this will shape up, and you would wonder why Qantas would tie themselves to a company which is carrying a lot more debt than them," he said.
BA was already engaged in merger talks with Spain's national carrier, Iberia, and a tie-up between BA, Iberia and Qantas would create the world's largest airline with a combined scheduled passenger kilometres flow of almost 270 billion a year, comfortably overtaking American Airlines' 222.8 billion.
Mr Timms said Australian Transport Minister Anthony Albanese indicated yesterday the Government would take a tough line on any potential merger to ensure the deal was in Australia's national interest.
Blue Oar Securities airline analyst Douglas McNeill said BA's latest move was in line with its strategy of taking a lead in consolidation in an industry battling wild swings in fuel prices and falling demand as global recession loomed.
"They are out to create a global player, which is an audacious goal that would be difficult for any management team to pull off."
