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"Australia's Qantas Airways and British Airways have called off talks for a USD$6.4 billion merger that analysts said could have helped transform an industry grappling with falling demand and volatile fuel prices.

Qantas and BA announced the end of talks in a three-paragraph statement issued to the Australian and London stock markets on Thursday, saying they could not agree on key terms for a deal.

"Despite the potential longer-term benefits for Qantas and BA, the airlines have not been able to come to an agreement over the key terms of the merger, at this time," Qantas said.

Qantas chief executive Alan Joyce had warned last week that the merger faced major hurdles and would only go ahead if Qantas could secure major revenue and cost benefits. He also lamented the fact the talks had been leaked and forced out into the open.

A marriage of Qantas and BA faced several big challenges, not least the ownership split of the combined business, which was proposed to be formed through a dual-listed merger whereby the two firms would have kept their existing listings but be managed as one."

(Airwise)