Neither side was able to agree over key terms, and in a joint statement the two airlines said that after detailed discussions about a potential merger, talks had now ended.
They said: “Despite the potential longer term benefits to both British Airways and Qantas, the airlines have not been able to come to agreement over the key terms of a merger at this time.
“British Airways and Qantas will continue to work together on their joint business between the UK and Australia and as part of the oneworld alliance.”
Under the oneworld alliance, regulators allow them to fix prices and codeshare on the UK-Australia route through a joint service agreement that has enabled BA to reduce its Australian flights to twice daily to Sydney.
Qantas’s new chief executive, Alan Joyce, warned last week that the merger faced “significant hurdles” and would only proceed if Qantas could be assured of major revenue and cost benefits. He expressed concern over BA’s £1.7 billion pension liability.
He also ruled out a three-way merger with Iberia, saying BA would have to choose between Qantas and Iberia as “only one of the transactions could take place”.
Fernando Conte, the chief executive of the Spanish flag-carrier, had also expressed doubts over a three-way deal, saying it would be “too complex”.
Potential savings from a merger with Iberia are estimated at about £400 million, but a Qantas deal only between £100 million and £200 million because of the geographical separation of the airlines.