In an announcement to the London Stock Exchange BA said it was studying a merger with the Australian flag carrier “in a dual-listed company structure”. There was “no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate,” it said.

BA said a deal with Qantas would be “a step to a truly global airline. The geography of the network fits very well.” The carrier said under the structure being discussed each airline would remain a separate legal entity and would have separate shareholders. There would be “a combined balance sheet, overlapping boards of directors and an integrated management team.” If a deal emerged it would be “a merger of equals”.

The UK group said it was continuing its separate discussions on a merger with Spain's Iberia, which have been under way since July but have been slowed down by concerns from the Spanish side about the growing deficits in the BA pension funds. This depressed the BA share price and has undermined the original 65/35 per cent share exchange ratio planned when the negotiations opened. A merger between BA and Qantas would be much more ambitious and would be the first time two carriers have attempted to combine their operations between two different regions of the world.