Singapore's government will encourage Singapore Airlines Ltd to pursue links with Qantas Airways Ltd, including a possible merger, the country's Transport Minister Yeo Cheow Tong said.
Initially, Asia's two largest airlines outside Japan may seek to co-operate on maintenance and other services rather than to merge, Yeo said today on Nine Network's Business Sunday program. The Singapore government would be "very happy" to cut its 57 percent stake in the airline, known as SIA, he said.
Australia's Prime Minister John Howard and Trade Minister Mark Vaile last month raised the possibility of a merger between the two airlines. Qantas, Australia's biggest carrier, is likely to merge with another international airline as early as 2010, Chief Executive Geoff Dixon said June 26.
"In Asia, we will also have to make sure that we are part of what's happening around the world, the strengthening of airlines," Yeo said. "If that means that Qantas and SIA should also be looking at joining the consolidation process, then I think we will encourage them to actively talk to each other."
The international airline industry needs to consolidate to help cut losses of more than US$6 billion a year, Singapore Airlines Chief Executive Chew Choon Seng said on the same program. Airlines should in the future be able to operate like other major industries and consider mergers across national boundaries, he said.
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