The airline, which blamed the closure on a slump in international travel demand, said the base was no longer viable.

The Australian carrier had previously embarked on a large recruitment drive for offshore cabin crew in a bid to slash labour costs and dilute the influence unions have over its 35,000-strong workforce.

However, Qantas has now decided to end its contract with the base that employed 123 Thai nationals to work as cabin crew on the airline’s international flights.

The Flight Attendant’s Association of Australia said that the base closure was a stark reminder that long-haul cabin crew have little job security in today’s economic climate.

Qantas has so far resisted axing cabin crew from its Australian-based workforce, although it has introduced cost cutting measures such as leave-without-pay.

Several years ago, the airline and union struck a deal to have no more than 25 per cent of international cabin crew made up of foreign nationals.

The union has a longstanding opposition to the offshoring of long-haul cabin crew jobs and Qantas employs a total of about 4500 international flight attendants.

“I wish to reiterate that this announcement of the closure of Bangkok, further demonstrates the serious job security situation for long-haul crew,” said union’s secretary of the international division, Michael Mijatov.

“This announcement by Qantas should demonstrate to even those that are most sceptical amongst us, that the current situation facing us is serious.”

Qantas also has long-haul cabin crew bases in London and Auckland. Crews based in New Zealand’s largest city typically work 30 per cent more hours on half the base pay of their Australian counterparts.

Qantas has been pulling almost every lever to cope with a dire short-term outlook, including grounding planes, delaying and cancelling deliveries of new aircraft, and raising $500 million from investors to keep its investment-grade rating.

In the past 18 months, the airline has already laid off up to 3250 employees and just last week it announced $1.5 billion in spending cuts over three years, including $500 million this financial year. It follows $3 billion in cuts over the previous five years.
Last week, Qantas also announced its first half-year loss in six years as it suffered from big falls in demand for premium seats on international routes.

The airline has decided to close the Thailand base because of falling demand for international travel.

With Bangkok now closed – Auckland, London and Tokyo are the three remaining off shore bases.

Qantas has been resistant to cutting cabin crews from its substantial Australian-based workforce, instead opting for leave-without-pay measures.

Earlier this month the Australian carrier said passenger volumes were improving but the economic outlook remains volatile after booking a 87.9 per cent decline in annual profit.

The airline previously embarked on a large recruitment drive for overseas cabin crew in a bid to cut labour costs and dilute the influence unions have over its 35,000-strong workforce.

But Qantas has ended its contract with the company that employed 123 Thai nationals to work as cabin crew on the airline’s international flights.

The Flight Attendant’s Association of Australia said today that the closure was a stark reminder of the job insecurity faced by long-haul cabin crew.

Qantas has so far resisted cutting cabin crew from its Australian-based workforce, although measures such as leave-without-pay have been introduced. The airline’s international operations are losing money, particularly on the key routes to the US and Europe.

The airline and union struck an agreement several years ago not to have more than 25 per cent of international cabin crew made up of foreign nationals. Qantas employs a total of about 4500 international flight attendants.

The union has a longstanding opposition to the offshoring of long-haul cabin crew jobs.

“I wish to reiterate that this announcement of the closure of Bangkok, further demonstrates the serious job security situation for long-haul crew,” the union’s secretary of the international division, Michael Mijatov, wrote in a letter to members.

“This announcement by Qantas should demonstrate to even those that are most sceptical amongst us, that the current situation facing us is serious.”

Qantas also has long-haul cabin crew bases in London and Auckland. Crews based in New Zealand’s largest city typically work 30 per cent more hours on half the base pay of their Australian counterparts.

Having already laid off up to 3250 workers in the past 18 months, Qantas last week announced $1.5 billion in spending cuts over three years, including $500 million this financial year. It follows $3 billion in cuts over the previous five years.

Qantas also recorded last week its first half-year loss in six years as it suffered from big falls in demand for premium seats on international routes.

The airline has been pulling almost every lever to cope with a dire short-term outlook, including grounding planes, delaying and cancelling deliveries of new aircraft, and raising $500 million from investors to keep its investment-grade rating.

Police confirmed yesterday that a St Kilda woman had been charged with a series of assault-related offences following an altercation outside a Barkly Street restaurant on August 16.

She has been charged with recklessly causing serious injury, intentionally causing serious injury, recklessly causing injury and assault. She has been bailed to appear at the Melbourne Magistrates Court on October 26.

Ms Robertson, 41, was sacked from her flight attendant job with Qantas in 2007 after she had sex with Fiennes in the toilet on a flight from Darwin to Mumbai.

Ms Robertson pocketed $100,000 from Britain’s The Mail On Sunday newspaper to publish the details of her romp, and later conducted a paid interview with Channel Nine’s 60 Minutes.

She also revealed that she had received as much as $2000 a night working as a prostitute.

The news is likely to come as a blow to BA chief executive Willie Walsh who has made it his ambition that the airline is one of a handful of carriers to emege from the current economic downturn and inevitable consolidation. BA has also since July been trying to negotiate a merger with Spanish rival Iberia.

The ending of talks is unlikely to surprise aviation anaylsts in Australia who had failed to see many benefits for Qantas.

The merger was also strongly opposed by Australian unions, who argued it would affect the jobs of several thousand employees.The flag carrier had argued a deal with BA would help it save on maintenance costs and weather the global financial downturn.

Together, the two airlines would have had annual sales of $23bn and a fleet of 500 planes.

Qantas Chief Executive Alan Joyce warned last week that the merger faced major hurdles and would only go ahead if Qantas could secure major revenue and cost benefits.

Today both the airlines said that “Qantas and BA will continue to work together on their joint businesses between Australia and the UK as part of the oneworld alliance.”

Qantas had said that should the talks with BA fail, the carrier might seek to strike a similar deal with an Asian rival.

The Commerce Commission in New Zealand on Monday said it had begun High Court proceedings against 13 airlines and seven staff, including senior executives.

Up to 60 airlines globally and many individuals were potentially involved in the alleged price fixing.

The Commission’s action focused on those airlines that had the greatest impact on New Zealand, and allegedly the most culpable people.

In a statement the Commission alleged the airlines first entered into an illegal global agreement in 1999/2000.

“The airlines imposed the fuel surcharges between 2000 and 2006. The allegations also involve a series of regional price fixing agreements,” the statement said.

“In addition, the Commission alleges that a number of airlines conspired to price fix through the imposition of a security surcharge immediately following the 9/11 terrorist attacks,” it said.

It said all the people named in the proceedings were managers who were allegedly involved in promoting the conspiracy or deliberately refrained from stopping the conduct.

Commerce Commission chair Paula Rebstock said the alleged collusion had caused extensive harm to the New Zealand economy.

“New Zealand is a long way from its overseas markets and so the harm to our economy and our ability to compete internationally will have been disproportionately greater than in other jurisdictions,” Rebstock said.

“Many New Zealand businesses and every consumer will have been directly affected by the increased air freight costs over many years.”

Airlines earn an estimated $NZ400 million-plus ($A330 million) annually transporting air cargo to and from New Zealand, and during the seven years this agreement allegedly occurred, total revenue was about $NZ2.9 billion ($A2.4 billion), the Commission said.

The New Zealand action comes after the Australian Competition and Consumer Commission took action in October against Qantas and British Airways for alleged price fixing in the air freight market.

The federal court in Sydney last week fined Qantas $A20 million and British Airways $A5 million.

Some of the airlines named in the New Zealand proceedings were cooperating with the current investigation and an early resolution may be possible, the Commission said.

The airlines named by New Zealand authorities are: Qantas Airways, Air New Zealand, British Airways, Cargolux International Airlines S.A, Cathay Pacific Airways, Emirates, PT Garuda Indonesia, Japan Airlines International, Korean Airlines, Malaysian Airline System Berhad Limited, Singapore Airlines Cargo Pte Limited and Singapore Airlines Limited, Thai Airways and United Airlines.

The scepticism has much to do with the failed merger talks between government-controlled Proton Holdings Bhd and Volkswagen which kept investors hanging on tenterhooks and much later, very disappointed.

This is also not the first time that MAS and Qantas are at the negotiating table. In 2000, when Tan Sri Tajudin Ramli helmed MAS, the national carrier talked to “several potential alliance partners” including Qantas. But the deal was abandoned on grounds that it appeared too much in Qantas’ favour.

While the landscape of the global airline industry, in general, and MAS, in particular, has altered drastically since then, one overriding factor remains the same: How much to give in.

In a filing with Bursa Malaysia, MAS said it was pursuing strategic partnerships with a number of airlines on collaborations that range from joint ventures and code shares to interlining partnerships.

It said it was part of its Business Transformation Plan to pursue such a tie-up.

MAS also recently inked a memorandum of understanding with Qantas for a joint venture in maintenance, repair and overhaul (MRO).

A merger of equals? No way

But what kind of merger will it be?

“It won’t be a merger of equals,” says one industry watcher. There’s a whole lot more truth in that statement than meets the eye.

In terms of market value, Qantas is worth around US$3bil (RM10.8bil). The Australian airline is also in talks with Europe’s third largest airline British Airways (BA), which has a market value of around US$2.6bil (RM9.36bil). On the other hand, MAS’s market value is around RM4.4bil.

The Qantas-MAS deal will likely spark some “nationalistic” anxiety among Malaysians, not too different from the current hot debate among Australians over the proposed Qantas-BA tie-up. While the British press has touted the deal as one between “equals”, Australian regulators are wary and the general public unnerved that it could end up being a takeover of Qantas, this despite many assurances from Qantas chief Alan Joyce.

Underscoring the fact that mergers minus equity swaps are still onerous affairs, Qantas admitted earlier in the week that the US$5.6bil deal with BA is facing major obstacles and there is a reasonable chance it will fall through.

Where does MAS stand in this equation? What will the merger or profit-sharing ratio be? Will the alliance close the quality gap between the airlines and will the bigger brand inadvertently gobble up the other?

“Qantas will have the upper hand, just judging by its scale. If it can squeeze a favourable deal out of BA or walk out if it can’t, then it can do so with MAS,’’ an industry watcher says. “Realistically speaking, the market will find it hard to believe that MAS is on the cusp of a so-called super alliance, let alone a three-way mega merger.”

“We believe there is a low possibility of a merger materialising,” says OSK Research analyst Ng Seng Guam, adding that since Qantas is still in talks with BA, any tie up with other airlines like MAS may jeopardise its due diligence process on the existing proposal.

He adds that given the complication and regulatory approval required for the Qantas-BA deal, it may take years to complete and, hence, drag out the potential collaboration.

Aseambankers is equally doubtful. “Despite the potentially far-reaching synergistic gains for MAS, fear of the unknown, like what would be the actual outcome of any potential ‘merger’ for MAS, could also be a stumbling block.”

Flight to merger

The airline industry is notorious for its vulnerability to sharp downturns. Bitter competition, towering debts and record fuel costs this year alone have seen 30 airlines buckle. And while fuel prices have come off substantially, lumpy capacity increases as well as plummeting demand still cloud the industry’s prospects.

Over the week, it was reported that the International Air Transport Association (IATA) expects global airlines to post losses of US$5bil this year and US$2.5bil in 2009 as the economic crisis bites. “The outlook is bleak. The chronic industry crisis will continue into 2009 … We face the worst revenue environment in 50 years,” it has said.

Under such intense pressure and as the skies have been opened wide, many airlines are clamouring for consolidation as a means of achieving big savings.

The year 2008 may also be known as one of mega airline mergers. In United States, Delta Air Lines and Northwest Airlines merged in a US$3.1bil deal which galvanised the US airline industry but it didn’t quite set off a wave of consolidation as expected.

More recently, BA, whose merger with Spanish carrier Iberia is still a work-in-progress, said it is in talks with Qantas on a merger, which would create the world’s biggest airline. BA has also expressed interest to form an alliance with American Airlines.

In Ireland, Europe’s largest budget carrier Ryanair is considering a plan to take over its rival Aer Lingus while Germany’s flag carrier Lufthansa is in talks to take over Austrian Airlines.

Template for mergers

The cross-border takeover of the Netherlands’ KLM by Air France in 2004, which does not involve an equity swap, appears to be a popular template for mergers and one that is widely perceived to be the path MAS and Qantas have chosen for their alliance.

The outcome of the Air France-KLM deal, deemed to be the industry’s most celebrated merger, has been stunning and has “befuddled industry observers and rivals”, says Aseambankers in a recent report on the aviation sector entitled, Consolidation – friend or foe?

“The Air France-KLM example is encouraging not just because it created a healthier financial entity, which is less susceptible to the lows of the industry. Operating data – actual capacity filled and available capacity flown – all show startlingly positive trends. Improved seat factors were recorded…

“…the Air France-KLM experience garnered more than just envious glances, but outright copy-cat attempts to emulate their operating successes.”

The key: It explicitly sought to optimise available resources and fleet instead of duplicating services or simply focusing on potential cost savings.

Why MAS needs this deal

OSK’s Ng wraps it up aptly: “…MAS may already be near its saturation point growing ‘solo’ … collaboration may be timely in moving the company up another notch.”

Many are impressed by the speed and depth of MAS chief Datuk Seri Idris Jala’s turnaround plan, which has lifted the company out of its abysmal state. The airline is generating profit and is in a cash position of RM4.8bil. His penchant for dissecting detailed information in every key aspect of the airline’s operations, through what some say is an onerous and tedious process but one that has been extremely fruitful particularly in slashing costs, is likely to be employed in any discussion of a potential alliance.

“The big boys want Idris’ time now. It speaks volumes about what he has done. Three years ago, it would have been almost blasphemy to catch another CEO talking about an alliance with MAS,” says an analyst.

But the truth is, for Qantas or any other major airline, MAS is an option, but not necessarily the ultimate or the most preferred choice.

“Qantas, I think, or another major airline, if given the choice, would prefer to go with Singapore Airlines, Thai Airways or Cathay Pacific.

So, MAS needs to move fast or it could be eternally left behind. The current situation favours MAS.

Thailand is facing internal strife; Cathay Pacific is facing the music of some misteps in hedging policies and its expansion into mainland China.

So the current MAS team should grab the opportunity. And they should get the blessing from the regulators to forge this tie up,” he says.

Looming concerns in the industry make a merger of sorts highly compelling. Asean will open its skies in a matter of weeks, which means competition will intensify in the region. Compared to Bangkok, Singapore and Hong Kong, passenger traffic in the KL International Airport is not attracting enough feeder traffic that a hub would ordinarily enjoy.

If MAS ties up with one of the big boys, it will be one way of feeding foreign passengers to domestic routes. In addition, there is a big sweetener in tying up with Qantas, which apart from BA, controls the Kangaroo route (air routes between Australia and the United Kingdom).

“The multiplier effect is tremendous if it can do this. Not only will it be serving the airports, it will also benefit the tourism and business sectors,” an analyst says.

The plus points for a tie up are plenty as it can snowball into key aspects of operations. OSK Research’s Ng points out that an alliance can win larger discounts from Airbus and Boeing Co. “The enlarged alliance certainly may leverage up buying power, not limited to aircraft but also other materials at sizeable quantities,” he says.

In addition, an alliance will enable, for example, Qantas to eventually sell the MAS inventory closer to its own yields, which are among the world’s highest, instead of MAS’ historically low yields, Aseambankers points out.

Moreover, “with Qantas already having a strong LCC (low-cost carrier) business model via Jetstar, the combination with MAS or Firefly may create a new giant in LCC that covers the north to south of the Asia-Pacific market,” Ng says.

Selling the idea

On Wednesday, Idris and his senior team hosted an informal dinner for a large group of analysts at the Shangri-la Hotel, Kuala Lumpur. Idris took the opportunity to explain the rationale for a potential alliance with a strategic partner, referring to it as a “hard-wired” deal.

Did the analysts walk out convinced? One sceptical analyst has since sort of changed his stance. “The talks have been going on for 20 months. Detailed studies are being carried out on synergies such as routes, etc. Idris and his team have proven themselves. The stars seem aligned. Maybe it can happen.”

Qantas and Singapore Airlines have reduced their international surcharges by about 10 per cent. Qantas has reduced its domestic surcharges by about 20 per cent and, separately, has rescinded a fuel-related ticket price increase of about 3 per cent introduced earlier this year. Virgin Blue has reduced its surcharges by about 20 per cent.

“We are keeping our word,” says Virgin Blue chief executive Brett Godfrey. “We have always promised that if the cost of fuel reversed [came down], we would gladly reverse the surcharge accordingly. That is what we are doing.”

However, all three airlines appear reluctant to forgo all of the price increases made in the name of fuel surcharges.

Since July, the Singapore spot price for jet fuel has dropped by more than 60 per cent in US dollars. Factoring in the fall in the value of the Australian dollar, the price of jet fuel in the local currency has fallen 30 per cent since the middle of the year.

Compared with a year ago, jet fuel is about 15 per cent cheaper in Australian dollars, in spite of the currency’s fall. Yet Qantas is maintaining its fuel bill last financial year of $3.6 billion will still increase this financial year by about $750 million, or 20 per cent.

That outlook is at least 35 per cent better than what Qantas was forecasting in August (a $2 billion increase in its fuel bill), when, despite the gloom over oil prices, the airline was reporting a record gross profit of more than $1.4 billion.

What are consumers supposed to believe?

“The whole concept of fuel surcharges is on the nose and should be gone forever,” says airline industry analyst Peter Harbison, of Sydney’s Centre for Asia Pacific Aviation. “It’s the appropriate time for the industry to say let’s have an end to fuel surcharges – no more.”

Harbison believes rapid changes in the outlook for the airline industry might make fuel surcharges irrelevant anyway, except as one of the many surcharges that are stacked on to frequent flyer redemptions to ensure seats that were once “free” now cost anything up to $800 for a long-haul return flight.

“Already, fuel surcharges don’t apply when airlines start discounting seats and, in some cases, we’ve seen them discounting full fares as well [to attract business travellers],” Harbison says. “In the past few months, the domestic industry in particular has gone dead and the airlines have a lot of empty seats to fill, so we’re going to see a lot of very aggressive discounting in the months ahead.”

The fuel surcharges are also unpopular with Australian travel agents, who are now fighting a class action against the airlines over the issue.

Some airlines, however, are breaking ranks. The low-cost carrier AirAsia, whose subsidiary AirAsia X flies from Kuala Lumpur to the Gold Coast, Melbourne and Perth, became this month “the first airline in the world” to scrap fuel surcharges, even though the group says that doing so would cost about $380 million in revenue.

So far, the only benefits the potential partners are offering passengers are access to a bigger network and a larger frequent flyer program — but neither claim has been fleshed out with details.

The airlines were forced to announce last week that they were discussing a potential merger through a dual-listing structure, but they did not release details.

Under the dual listing, each airline would remain listed in its home country and would continue to operate under its own brand, but there would be a single management structure. This would allow the carriers to cut costs by up to 2 per cent, analysts estimate, but experts say it is difficult to see how Australian consumers would benefit.

The airlines already work together through the oneworld alliance and regulators allow them to fix prices and codeshare on the kangaroo route through a joint service agreement that has enabled BA to reduce its Australian flights to twice daily to Sydney.

“I do not think consumers will see much in the way of any changes on the kangaroo route,” said Derek Sadubin, chief operating officer at the Centre for Asia Pacific Aviation. “They might notice some more network enhancement beyond Heathrow but they have pretty much explored most of the opportunities already.”

Mr Sadubin said the airlines’ products were “pretty much blurred already” and could become more so.

“If anything, it might give consumers less certainty on which carrier they will be seated,” he said.

JP Morgan analyst Matt Crowe said consolidation would tend to transfer pricing power from consumers to airlines.

“Consumers have probably benefited from having incredibly competitive aviation markets putting in more capacity at lower prices than you would optimally do, and consolidation is a way of reversing that trend,” Mr Crowe said.

Cameron McDonald, at Deutsche Bank, said it was difficult to say how the deal would affect consumers, given that people did not yet know what the merger would look like.

The kangaroo route was highly competitive and it would be difficult for BA or Qantas to raise fares.

“Without doing any specific analysis around it, you have a number of carriers on that route who are dying to add capacity or take market share,” Mr McDonald said.

“So they have got to be a little careful in trying to exercise any pricing power … in a weakening demand environment.”

The merger plan reflects the Qantas view that greater liberalisation of international aviation agreements will unleash a wave of consolidation in the industry and that powerful airline groups will be best placed to survive.

It also addresses Qantas worries that airlines such as Emirates and Singapore Airlines, with hubs at the centre of busy international routes, have a competitive advantage.

Airlines such as Emirates, which sits in the centre of a growing network and can now offer one-stop flights from Australia to every continent, have been gradually increasing their presence in the local market.

Qantas mainline in September counted for over 25 per cent of the international market to and from Australia, down from 42.7 per cent in 1994, with Jetstar adding another 6percent. This compares with an 11.3percent share for Singapore, 9.4percent for Air New Zealand and 7.1percent for Emirates.

It is believed the allegation is that the two men became sexually involved with a 17-year-old female passenger on a London-bound flight.

A spokesman for Australia’s largest airline today said the two staff members had been stood down but would not elaborate.

“Two Qantas flight attendants were stood down from duty on 14 September,” the spokesman told AAP.

“This followed allegations about them made by another flight attendant.”

Qantas would not confirm the nature of the allegations but it is understood both men were Australian-based attendants.

“We are currently investigating the allegations and it is not appropriate to comment any further,” a Qantas spokesman told AAP.

The allegation first surfaced following an in-house announcement from a Qantas customer service manager.

But the International Air Services Commission (IASC) came close to denying the application, admitting it would have blocked it had Virgin Blue not signalled that it planned to fly to South Africa.

The Australian Competition and Consumer Commission (ACCC) maintains the code share reduces incentives for Qantas and South African Airways (SAA) to compete on both price and services on the route.

The two airlines are the only ones to fly directly between the countries. They control about 71 per cent of the market. Their main competitor, Singapore Airlines, has about 12 per cent.

The competition regulator fears that Qantas’s plans to increase flights on the route over the next six months will mean it will tighten its grip on the market before Virgin enters the fray.

Virgin’s long-haul carrier, V Australia, wants to begin flying to South Africa by October, although industry insiders are sceptical about the timing. It does not plan to make its first flight between Sydney and Los Angeles until February 28 – three months later than scheduled.

The ACCC said the only competition came from carriers which flew indirect between the two continents via their airport hubs. The additional travel time ranges from seven to 16 hours.

The International Air Services Commission has repeatedly raised concerns over the years about “limited competition” and “continuing high fares” on the route.

But in its latest decision, the commission said it was heartened by both Qantas’s plans to increase flights on the route and Virgin’s intentions.

Under the code share, Qantas buys blocks of 100 seats on each SAA flight while the South Africans purchase up to 160 seats on each of the Australian carrier’s aircraft.

Qantas flies five Boeing 747-400 return trips between Sydney and Johannesburg each week and SAA flies five A340s between Perth and South Africa’s largest city. Qantas will add a sixth service next Tuesday and a seventh by the middle of next year.

A Singapore Airlines spokeswoman said the South Africa route was yet another example of consumers paying more because of a lack of competition.

“Singapore Airlines offers fares on the route that are lower than the national carrier’s despite the fact that we fly via Singapore … A lack of competition on the route is keeping the fares unreasonably high,” she said yesterday.

Both Qantas (other-otc: QUBSF – news – people ) and Iberia (other-otc: IBRLF – news – people ) seem to have adopted a “my-deal-or-your-deal” stance since Tuesday, when British Airways (other-otc: BAIRY – news – people ) responded to press speculation by confirming it is in talks with Qantas. On Monday, Qantas Chief Executive Alan Joyce said that “only one” of the proposed mergers could take place, and noted that there were still “significant hurdles” to overcome for a successful Qantas-BA tie-up.

British Airways obviously does not agree, though a spokesman for the airline refused to offer fresh comment. The British carrier is still officially pursuing both potential mergers, and is reportedly even trying to woo Iberia shareholder Caja Madrid into backing a Spanish-British-Australian entity. Iberia Chief Executive Fernando Conte was kept in the dark about BA’s plans with Qantas, which has added to tensions around the negotiating table. (See “Tension Brews Between BA, Iberia.”)

Although BA seems to be giving Qantas priority at the moment, Iberia has a 9.9% stake in the British Airline that may prove vital in approving any Qantas deal.

Shares of British Airways soared 10.1%, or 15.60 pence (23 cents), to 170.0 pence ($2.52), during afternoon trading in London. Leading shares in Europe were up some 7.0%, but the prospect of a BA-led global airline has buoyed investor sentiment in the stock: Qantas, Iberia and American Airlines all represent three different pockets of the world, and BA says there is “no overlap” between them.

The urgency of the economic environment may help BA’s chances, however. Despite the reluctance of Qantas and Iberia to accept a three-way merger, or to bear the brunt of BA’s pension liabilities, they have little room for negotiation. Fixed costs are high, travel demand is crippled and lucrative business profits are hard to find.

“Iberia needs a merger, and Qantas does, too,” said Stephen Furlong, an analyst with Davy Stockbrokers. “It’s hard to say who’s got the upper hand at this point.” He said Qantas was facing fresh competition from upstart Middle Eastern airlines like Emirates, which is reportedly seeking approval from the Australian government to fly between Australia and the U.S.

The hurdles standing in the way of a $9billion tie-up – namely BA’s inferior economic state, and strict regulatory rules – were significantly tall and numerous, he said.

But if the merger talks progressed to the next level, Mr Joyce believed Qantas would be in the driver’s seat to secure a better deal for its shareholders than its rival could for its own investors.

In his inaugural speech as the head of the national carrier, Mr Joyce said the Qantas board was also not ruling out concurrent talks with an Asian carrier, regardless of the outcome of the Qantas-BA negotiations.

It was the first time the 42-year-old Irish-Australian had officially commented on the merger talks, having been caught out by a media leak in London last week.

He would not be drawn on the details of the BA talks, or the likely make-up of a dual-listed company.

“There is a very reasonable chance that this might not go ahead. We are still in a position where there are significant hurdles to overcome,” he told an Australia-Israel Chamber of Commerce lunch.

“There is absolutely no guarantee that a transaction will be forthcoming. There is a lot of discussion and reviews that need to be done before we get comfortable.”

One thing that will be certain in any merger is the protection of Qantas’s iconic branding and identity, as well as majority local ownership.

Mr Joyce, only in the top job for 10 days, ruled those as non-negotiable items.

While admitting many Australians would have a passionate opinion on why Qantas should not merge with another carrier, he believed it was vital.

The firm believer in airline consolidation said if it wasn’t to be with BA, it would be with another global-focused carrier, most likely in Asia.

Meanwhile, the Qantas boss also had a pot shot at the Australian media for “playing a role” in tarnishing the airline’s image. He admitted Qantas had dropped the ball on its on-time performance this year, but said media coverage had been excessive and focused on routine problems faced by every airline.

“Quite ordinary events, like minor technical faults that require attention before departure, and aircraft substitutions have received disproportionate and even alarmist coverage,” Mr Joyce said.

Qantas shares surged 7.21 percent yesterday, closing 16c up at $2.38, giving the company a market value of $4.6billion.

These include “an appropriate merger ratio,” issues connected with British Airways’ pension fund and the global economic outlook, Chief Executive Officer Alan Joyce said today in Sydney at a business lunch, the 42-year-old’s first public speech since taking the CEO role Nov. 28.

Qantas revealed the merger talks with its London-based rival last week as Joyce seeks to cut costs amid mounting losses for the airline industry. Combining with British Airways would create a company with about $23 billion in annual revenue, carrying more than 71 million passengers on almost 500 planes.

“Qantas comes to these negotiations from a position of strength,” Joyce said today. “We are in these discussions because a merger has the potential to create the global scale that would allow us to grow and enhance our services, and deliver significant revenue and cost synergies.”

Concern about pension fund liabilities has delayed progress on British Airways’ proposed tie-up with Spain’s Iberia Lineas Aereas de Espana SA, analysts at Citigroup Inc. said in a Nov. 21 report.

British Airways, which will complete a tri-annual actuarial review of its pension program in 2009, said Sept. 18 that the annual funding deficit widened to 1.5 billion pounds ($2.2 billion) as of March 31, the end of its last fiscal year.

Qantas shares rose 16 cents, or 7.2 percent, to A$2.38 at the close of trading in Sydney, paring this year’s decline to 56 percent.

No Guarantee

Joyce said there was “no guarantee” a transaction will proceed, adding that British Airways can link with Qantas or Madrid-based Iberia but not both.

“BA are conscious, as Iberia are and we are, that only one of the transactions could take place,” Joyce told reporters after the speech. “When you explore dialogue with any carrier the likelihood is that the carrier has multiple dialogues going on, that’s the way it takes place.”

The Australian carrier will look at opportunities in Asia if the British Airways talks don’t result in a deal, he said.

Merger discussions began under former CEO Geoff Dixon, who retired from the role last month and will remain a consultant to Qantas until the end of March.

Joyce said the Qantas name on airplanes is a “non- negotiable” item in the talks as he prefers to maintain existing brands, similar to what was done at Air France-KLM when the French company bought KLM Royal Dutch Airlines NV in 2004.

Australian Headquarters

Qantas will retain an Australian headquarters and any deal will comply with rules preventing majority foreign ownership.

The carrier has “flexibility” to do more cost cutting and improve productivity, Joyce said. The airline last month said 2009 profit may fall 64 percent to A$500 million as slowing demand for international travel forces it to cut passenger capacity and sideline planes.

Joyce said the airline, which spends A$1.4 billion ($911 million) on maintenance each year, hasn’t lowered safety standards. He made the comment in relation to incidents this year, including a mid-air plunge that injured 40 and an exploding oxygen tank which blew a hole in the fuselage of another flight.

Customer confidence in Qantas’ safety record has fallen after the incidents, with nearly two thirds of Australians saying its standards have worsened in recent years, the Australian newspaper said today, citing a survey by UMR Research.

“A confluence of events have shaken that safety perception,” Joyce said. “The most important thing is that safety is the number one priority.”

Federal Transport Minister Anthony Albanese said yesterday that Qantas had to remain Australian-owned for national security reasons.

He cited bilateral aviation agreements — for example, the arrangement with Japan restricting landing rights to a “51 per cent Australian-based airline” — as well as the importance of a national carrier during emergencies, such as last week’s shutdown of Bangkok’s international airport.

“There are national security issues, particularly for an island continent located on the globe where Australia is, for having a national airline,” Mr Albanese told the ABC Television’s Inside Business program.

The minister noted, as well, that he had been able to pick up the telephone last week and ask Qantas chief executive Alan Joyce for extra flights out of Thailand.

It is understood, however, that any Qantas-BA deal would involve a dual-listed company structure that would comply with the act, which requires Qantas to be based here and have two-thirds of its board seats occupied by Australians, including the chairman’s position.

Qantas has yet to start lobbying the Government about the transaction, preferring to wait until the proposed merger terms are finalised, which is unlikely before Christmas.

Share market trading over the past 12 months suggests Qantas would be the senior merger partner by a ratio of 55:45.

The airline’s recent 2009 profit downgrade to about $500 million has, however, narrowed the gap to 52:48.

Mr Joyce and his BA counterpart Willie Walsh met in Hong Kong midway through last week.

Instead of making headway with the merger, they spent most of their time responding to an early leak of their merger plans to the media.

Both parties have done due diligence but the process has not been completed, although $US500 million ($771 million) in synergy benefits have been identified. One source said the major unresolved issues were the airlines’ relative values, a pound stg. 2 billion ($4.5 billion) deficit in the pound stg. 16 billion BA pension scheme and BA’s outlook given its heavy exposure to a downturn in trans-Atlantic flying because of the global financial crisis.

On the upside for BA, the performance of its new Terminal 5 at London’s Heathrow Airport had been “encouraging”, the source said.

The structure of the deal is understood to be fairly well advanced, and will approximate that of BHP Billiton-DLC.

In the current dislocation of debt markets, both parties are keen to avoid any trigger for a refinancing.

A potential spanner in the works, though, is the fate of BA’s scrip merger discussions with Iberia. Last July, the airlines said their boards “unanimously” supported the talks.

In an embarrassing revelation, Iberia chief executive Fernando Conte said last week he had not known that BA had been conducting parallel negotiations with Qantas.

Qantas sources said the involvement of Iberia did not necessarily kill a Qantas-BA deal.

The Spanish airline, though, could only be introduced to a three-way merger after a Qantas-BA deal took off first.

The reason was that a BA-Iberia deal would be a full merger, including board seats for Iberia directors.

A merger of that entity with Qantas would make it hard to comply with the Qantas Sale Act and its board requirements.

Last week, Qantas, the world’s 10th largest airline by market value, said it was exploring a potential merger with British Airways plc via a dual listed company structure.

Responding to the news, Transport Minister Anthony Albanese said in a television interview current legal provisions that require Qantas to be 51-percent Australian owned would not be revised.

The 1992 Qantas Sale Act also contains other provisions, he said, which the Labor government would not revise. These include that Qantas must continue to be the international name of the airline and that it should continue to be based in Australia, as well as some citizenship requirements for senior management.

“Those provisions of the Qantas Sale Act we don’t plan to make any changes to,” Albanese told Australian Broadcasting Corporation (ABC) television.

But current limits on the level of foreign ownership, of a maximum of 25 percent for a foreign individual and a maximum of 35 percent for a foreign airline, could be raised to help improve Qantas’s position, Albanese said.

“We think that consideration should be given to putting Qantas on a level playing field with other Australian-based international carriers,” he added.

There were strong strategic reasons for an island continent, such as Australia, to retain a locally-owned national airline, he said, citing the recent need to put on extra flights to get Australian citizens out of Thailand amid mass political protests there.

Albanese said he called Qantas Chief Executive Alan Joyce to request this move.

Some bilateral air services agreements also required 51 percent control, Albanese said, citing Australia’s pact with Japan.

“For example, only a 51 percent Australian-based airline is eligible to fly from Australia to Japan,” he said.

“That’s part of that bilateral agreement. So there are implications there that are significant.”

It is Ryanair’s second tilt at the Irish flag carrier, where Mr. Walsh once sat in the CEO’s chair. The last attempt by the low-cost carrier to absorb its Irish rival was rebuffed from all sides: The Irish government, which owns a quarter of Aer Lingus, said no and so did the Aer Lingus unions, which control 14 per cent of the stock. The final blow came from Brussels, where the European Commission ruled against the combination on the grounds that it would create a monopoly on routes from Dublin to European cities.

The indefatigable Mr. O’Leary reckons he has a better chance this time. The world has changed, he says: airline bankruptcies, recession and the recent catastrophic surge in jet fuel prices have changed the landscape. More importantly, the Ryanair chief says, look at what everyone else is doing. Air France is in bed with KLM. Lufthansa has taken over Swiss International Air Lines and is flirting with Austrian Airlines, Brussels Airlines and British Midland Airways (bmi), the British carrier. EasyJet has taken over GB Airways.

The Irish government might be tempted; Mr. O’Leary is dangling a €188-million ($300-million) carrot under its nose and Brian Cowen, the Irish Prime Minister, might be tempted to take the money, fill the draining government coffers and ignore the bluster from the airline unions. After all, Aer Lingus is losing money, the airline’s bosses are squabbling with the unions about laying off 1,500 staff, and if the choice is between a bust national airline or an Aer Lingus run by an aggressive cost-cutting empire builder, the solution is obvious.
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The solution is less obvious in Brussels, where the European Commission is showing no sign that it is prepared to suspend competition rules just because a few businesses are running out of cash. The Commission has allowed governments to ride roughshod over the rules barring state aid in order to keep the banking system alive. For it to suspend merger control procedures as well would be to throw in the towel and concede that competition policy is a luxury – fair-weather politics for a world of cheap money, low oil prices and soaring profits.

Mr. Walsh is also reading the competition runes but he is hedging his bets. He has an astonishing three mergers on the go. BA’s long-running attempt to build a combined business across the Atlantic with American Airlines is still stuck with the U.S. Department of Transport, which needs to grant antitrust immunity. Meanwhile it has launched merger talks with Iberia, another code-sharing partner, and on Tuesday Mr. Walsh announced the final piece of his strategy to wrap the Union Jack around the globe.

Qantas is a glittering prize; it would give BA global reach and the opportunity to secure huge efficiency gains in the use of aircraft and crews. Qantas flies throughout East Asia and crosses the Pacific to Los Angeles. BA dominates the North Atlantic and stretches to the U.S. West Coast and into Asia. BA/Qantas would be a round-the-world airline, but it would be more than just a gimmick. BA already shares business on flights from London to Sydney and a merger would allow it to share resources and passengers around the globe.

BA used to have a slogan that it was the world’s favourite airline. Having been accused of price-rigging and having suffered debilitating labour unrest, Mr. Walsh might just settle for being the first global airline.

The question is whether the regulators will allow it. Other airlines are making aggressive moves, notably Lufthansa, which has been gobbling up market share among its neighbours both geographic and linguistic. Air France, too, favours regional dominance. With KLM it has two of the top three continental European airline hubs (Schiphol in Amsterdam and Charles de Gaulle in Paris).

BA’s strategy is to dominate routes, first the Atlantic and now the Kangaroo route to Australia, rather than passenger markets. It remains to be seen how the regulators respond but they will be mindful of the dangerous trend in air traffic. The International Air Transport Association last month reported a second month of global shrinkage in traffic; in Asia it has declined by 6 per cent, well ahead of a 2-per-cent cut in capacity by struggling carriers.

If governments want to use airlines as cash cows, punishing their carbon emissions with new taxes even as they tax passengers with duties, they need to recognize that the airlines can no longer be quaint national carriers. They must be multinationals and their competitive reach must be global.

Following an initial approach from Qantas, BA said it was studying a merger with the Australian flag carrier “in a dual-listed company structure”. “This is an exciting step towards the creation of the first truly global airline,” said Willie Walsh, BA chief executive. “We have complementary networks and similar views about consolidation.”

BA shares rose 17½p or 12.5 per cent on the news to 157p.

The carrier said that 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”.

There was “no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate”, the airline said.

The UK group said it was continuing discussions on a merger with Spain’s Iberia that have been under way since July but investment bankers close to the talks warned last night that BA would not be able to manage both deals. “It is going to have be one or the other,” said one banker involved. “A three-way deal would have a logic. It would be nice to see, but the reality is one deal or the other.”

The potential merger was attacked by Virgin Atlantic, BA’s UK long-haul rival. Steve Ridgway, chief executive, said, “one day it’s Iberia, then it’s American, and now Qantas. The only strategy BA seems to have is to lock up some of the busiest routes in the world, against the consumer interest.”

A merger between BA and Qantas would be much more ambitious than the Iberia deal and would be the first time two carriers have attempted to combine operations between two regions of the world.

Airline consolidation has only taken place within single regions such as this year’s Delta Air Lines takeover of Northwest Airlines in the US.

Most governments limit foreign ownership in their carriers. Australia is looking at reforms to its rules, which say that an individual foreign investor can own only up to 25 per cent of Qantas, while foreign airlines can collectively own up to 35 per cent.

As part of the team, our crew are responsible for all aspects of the flight – from ensuring that all regulatory and safety requirements are met; cooperating with other team members from across the airline to meet company goals; to ensuring that the highest standards of customer service are delivered each and every flight!

A Flight Attendant’s roster will vary every month. Flexibility is a must as you may be faced with last minute changes to your roster and operational delays. Your roster will involve early mornings, late nights, weekends and public holiday shifts, which could be single day duties or trips of two or more days. These days will vary in both length and destinations.

QantasLink Flight Attendants need to share in both visions and values that support the business in achieving its goals and objectives. These values encompass embracing the spirit of regional Australia, providing genuine and outstanding customer service and always acting in a way that is safe and in the best interests of our customer.

QantasLink Flight Attendants play a significant role in the customer journey, and with that in mind, your presentation and demeanour will always need to reflect the highest standards expected by QantasLink and the team you are working with.

QantasLink currently has Flight Attendants based in Brisbane, Cairns, Canberra, Melbourne, Mildura and Sydney.

When we recruit new team members, we look for the following:

Excellence in customer service and a passion for positively influencing the customer journey.
An understanding of the needs and comfort of our customers – whether they are regular or first time flyers, or those with special needs.
An ability to build both rapport and trust and be proud of the team you are part of.
A confidence in your ability to be competent in aircraft safety procedures and first aid when needed.
An ability to adapt to any situation that may present itself in a sensible, warm and safe way.
A level of resilience in an ever-changing and evolving industry.
If you believe that you have the right attitude and what it takes to succeed in an exciting and ever-changing industry that you would be proud to be part of, then we look forward to hearing from you soon!

Essential Requirements

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Minimum 18 years of age
Australian permanent residency and a passport ensuring unrestricted access to all Qantas ports of call with at least 6 months validity
Current Senior First Aid Certificate with a validity of 6 months at time of application
Responsible Service of Alcohol ‘Statement of Attainment’
Strong commitment to customer service and significant recent experience in a face to face role
An excellent level of health and fitness
Able to swim 50 metres and tread water, unaided, for 3 minutes
Height between 163-183cm

Training

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If you’re accepted as a Flight Attendant you will undertake a comprehensive training program that will cover all aspects of the role of a regional Flight Attendant. The training program at QantasLink includes classroom training followed by onboard practical training. Some of the tasks you will be required to perform include:

Lifting a 20kg emergency exit
Swimming and assisting people in the water
Demonstrated use of all emergency equipment
Controlling people in panic situations
Moving disabled people in evacuations
Practical implementation of first aid in an aviation environment

The Recruitment Process

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At QantasLink, our recruitment process has six stages. Candidates may progress through any number of stages, however it should not be assumed that completion of any stage within the recruitment process is a guarantee for an offer of employment with QantasLink.

Stage 1:
Firstly, you’ll need to complete an online application. Please ensure that your details are kept up to date and regularly check your e-mail for correspondence from us.

Stage 2:
You may then be selected to attend a group seminar where you will participate in both team and individual activities.

Stage 3:
As part of the overall assessment, there is a requirement for all applicants to complete a psychometric profiling assessment. This will usually be completed as part of the group seminar.

Stage 4:
If successful at the group seminar, you will be invited to attend a panel interview.

Stage 5:
Candidates who are successful at panel interview will need to complete medical and security checks.

All costs associated with the application process are the responsibility of the applicant.

Stage 6:
Reference checks will be conducted on all candidates. Generally, only previous ‘managers’ or ’supervisors’ of candidates will be accepted as referees.

While the newly released report focuses primarily on what happened on the flight deck, and the results of the ATSB’s early examination of systems data from the accident aircraft, the report devotes several pages to what happened in the passenger cabin during the emergency, damage to the cabin, and injuries sustained by crew members and passengers.

The upset happened while the aircraft was cruising at 37,000 feet. In describing the sequence of events, the ATSB report notes that at the time the emergency began, the first officer (F/O) had just left the flight deck for a scheduled rest break. The captain and second officer (S/O) were on the flight deck when things began to go awry. The captain asked the S/O to call the F/O back to the flight deck, and while the S/O was on the interphone asking the flight attendant to send the F/O back to the flight deck, “the aircraft abruptly pitched nose-down.”

The aircraft descended 650 ft. The crew described the movement as “very abrupt, but smooth. It did not have the characteristics of a typical turbulence-related event and the aircraft’s movement was solely in the pitching plane.”

The seatbelt sign was then illuminated and the S/O made a public address for passengers and crew to return to their seats and fasten their seatbelts immediately. A few minutes after the first event, the aircraft commenced a second uncommanded pitch-down event. This time the aircraft descended about 400 ft.

The ATSB report says [pp. 2-4]:
The captain announced to the cabin for passengers and crew to remain seated with seatbelts fastened. The second officer made another call on the cabin interphone to get the first officer back to the flight deck. The first officer returned to the flight deck at 1248. After discussing the situation, the crew decided that they needed to land the aircraft as soon as possible. They were not confident that further pitch-down events would not occur. They were also aware that there had been some injuries in the cabin, but at that stage they were not aware of the extent of the injuries.

[The crew then made an] emergency broadcast to air traffic control, advising that they had experienced ‘flight control computer problems’ and that some people had been injured. They requested a clearance to divert to and track direct to Learmonth, WA. Clearance to divert and commence descent was received from air traffic control.

…The flight crew spoke to a flight attendant by interphone to get further information on the extent of the injuries. The flight crew advised the cabin crew that, due to the nature of the situation, they did not want them to get out of their seats, but to use the cabin interphones to gather the information.
After the cabin crew advised the flight deck of several serious injuries, the crew declared a MAYDAY and made a emergency landing at Learmonth.

Injuries

Quoting again from the ATSB report [p. 5]:
Initial information provided to the Australian Transport Safety Bureau (ATSB) was that 14 people were taken by air ambulance to Perth. Injuries were considered serious, but not life threatening, and included concussion and broken bones. In addition, up to 30 other people attended hospital with possible concussion, minor lacerations and fractures, with up to a further 30 or so people with minor bruises and stiff necks who did not need to attend hospital.

Subsequent information indicates that one flight attendant and at least 13 passengers were admitted to hospital. The nature and extent of the injuries varied considerably, including injuries listed above and spinal injuries.

At the time of the first in-flight upset event, three flight attendants and the first officer were standing in the forward galley and one flight attendant had just left that galley. The first officer and two of the attendants received minor injuries and the other was uninjured. Four of the flight attendants were preparing to leave the crew rest area (four seats located near the Left 3 door), and all received minor injuries. A flight attendant standing in the rear galley received serious injuries.

Information has been obtained from over 10 per cent of the passengers to date. Based on this information, almost all of the passengers who were seated without seatbelts fastened received either serious or minor injuries during the first in-flight upset. Many of these passengers impacted the ceiling panels. Most of the passengers who had their seatbelts fastened were uninjured, although some received minor injuries. Passengers who were standing at the time of the first in-flight upset received either serious or minor injuries.
Damage

There was no structural damage to the aircraft, however the ATSB report had this to say about the passenger cabin [pp. 5-6]:
Inspection of the aircraft interior revealed damage mainly in the centre and rear sections of the passenger cabin. The level of damage varied significantly. Much of the damage was in the area of the personal service units above each passenger seat, and adjacent panels. The damage was typically consistent with that resulting from an impact by a person or object. There was evidence of damage above approximately 10 per cent of the seats in the centre section of the cabin, and above approximately 20 per cent of the seats in the rear section of the cabin. In addition, some ceiling panels above the cabin aisle-ways had evidence of impact damage, and many had been dislodged from their fixed position.

Oxygen masks had deployed from above nine of the seats where there had been damage to overhead personal service units or adjacent panels. Some of the cabin portable oxygen cylinders and some of the aircraft first aid kits had been deployed.
The report includes photos of damage to the ceiling panels above passenger seats, and in the aisle.