Qantas share price on watch after big merger plan dies

The airline just can't shake off its bad fortunes. Here's the latest blow that investors will be watching on Thursday.

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As if fortunes for the Qantas Airways Limited (ASX: QAN) share price couldn't get any worse, the airline revealed yet more bad news on Thursday morning.

Back in May 2022, Qantas agreed to acquire charter airline and wet lease provider Alliance Aviation Services Ltd (ASX: AQZ).

However, that proposal met a major hurdle in April when the Australian Competition and Consumer Commission announced it would reject the deal due to dilution of competition concerns.

It seems that ended up a fatal blow, as both airlines stated on Thursday morning that the merger has now been abandoned.

Both the Alliance Aviation and Qantas share price will be keenly watched by investors on Thursday morning.

Why the takeover was on the nose

The problem was that both airlines provide charter services to fly mining workers in and out of remote areas in Western Australia and Queensland.

"Qantas and Alliance currently strongly compete with each other in markets where there are few effective alternatives," ACCC chair Gina Cass-Gottlieb said back in April.

"Flying workers in the resource industry to and from their worksites is an essential service for this important part of the Australian economy, so it is critical that competition in this market is protected."

In a statement to the ASX, both airlines disagreed that the merger would have reduced competition and indeed would have "created customer value".

"However, both companies acknowledge that there is no reasonable path forward for the deal at present," the announcement read.

"Qantas will continue to serve the growing resources sector through its existing charter operations. It currently has around 27% of the total charter market."

Qantas and Alliance alliance will continue

Qantas holds 20% of Alliance shares, which will be retained.

The long-term agreement for Alliance to operate up to 30 E190 aircrafts on behalf of Qantas will also continue.

Four more E190s will join the fleet from April.

"Alliance is an important partner for the Qantas Group and the E190s have helped us open new routes across Australia," said Qantas Associated Airlines and Services group executive John Gissing.

"These four new aircraft will provide additional capacity and connectivity in the domestic market."

Qantas shares have plunged 27.4% since 24 July on the back of multiple governance and customer relations scandals.

The annual general meeting will be held on 3 November in Melbourne, where shareholders are expected to protest at the board's performance.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Alliance Aviation Services. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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