Sydney  - Qantas Airways Ltd and British Airways Plc have ended talks on a possible merger because they were unable to agree on key terms, Australia's flagship airline said Thursday.

"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 in a statement.

Both airlines would continue to be part of the Oneworld alliance and carry on joint flights between Australia and Britain, Qantas said.

A merger would have created an 8-billion-Australian-dollar (5.56 billion-US-dollar) company.

With the global economic downturn severely hitting airlines and the travel industry, many carriers have been looking at tie-ups to strengthen their positions.

Earlier, Qantas' new chief executive, Alan Joyce, had told local media that there were several hurdles to be overcome before a tie-up could be achieved. Among them was British Airway's parallel merger talks with the Spanish airline Iberia.

Joyce had said that there could be only one transaction.

According to the national Australian Associated Press news agency, Malaysia Airlines said this week that it had begun talks on mergers, including joint ventures, with various carriers, including Qantas. (dpa)