This will create a leading vertically integrated travel services business in Australia - with significant growth potential.

Qantas Airways Limited (Qantas) and Jetset Travelworld Limited (Jetset) have announced a proposed merger. Under the terms of the agreement, Jetset will acquire Qantas Holidays and Qantas Business Travel from Qantas in exchange for Jetset scrip. Post transaction, Qantas will own 58 per cent of Jetset's share capital.

The Chief Executive Officer of Qantas, Mr Geoff Dixon, said the merged entity would sell travel services to the total value of around $3 billion a year and generate revenues in excess of $800 million a year, making it one of the top travel businesses in the region.

"This is a strategic alignment that will bring together two of the strongest brands in travel, capitalising on each business's individual expertise enabling them, as a group, to build the scale needed to grow into a major industry force," he said.

Mr Dixon said:
* Jetset Travelworld was one of Australia's oldest and largest travel agency franchise groups with around 630 locations;
* Qantas Holidays was Australia's largest travel wholesaler; and
* Qantas Business Travel was the country's largest corporate travel management business in what was a growing sector.

"The merged entity will remain listed on the ASX under the Jetset brand, with the various businesses operating under their existing trading names."

Mr Dixon said the transaction would provide significant benefits to the businesses, their customers, and shareholders as the complementary strengths of each of the areas were harnessed in the one integrated grouping.

He said the merged entity would:
* have access to broader travel product content;
* benefit from potential revenue and cost synergies;
* provide customers with a one-stop-shop and an enhanced product range;
* offer multi-channel distribution, including direct and indirect channels as well as an improved dynamic packaging/online offering; and
* offer a more attractive proposition for potential Jetset Travelworld franchisees.

Mr Dixon said the transaction was an extension of the Qantas Group's segmentation strategy, aimed at providing greater autonomy and unlocking the value in its portfolio businesses.

"The transaction will create shareholder wealth and synergies will make it earnings per share positive. It will also provide a platform for growth for both Qantas Holidays and Qantas Business Travel."

He said:
* John King would continue as Jetset's Chairman, with Qantas having the right to appoint four of the seven-member Board;
* Peter Collins, currently Group General Manager Qantas Holidays, and Andrea Slark, currently Qantas General Manager Strategy Mergers and Acquisitions, had been appointed to lead the combined company as Group Chief Executive Officer and Chief Financial Officer respectively; and
* Jetset's existing management team would continue to head up existing Jetset business units following completion of the merger.

Mr Dixon said no redundancies were planned and the employment terms and conditions of existing Qantas and Qantas Holidays employees would be maintained.

He said that pending review by the Australian Competition and Consumer Commission and receipt of approval by the Foreign Investment Review Board, the transaction was expected to be completed by 30 April 2008.

Mr Dixon said Jetset Travelworld Limited would be accounted for as a subsidiary of the Qantas Group.

The merger will require approval by a majority of Jetset shareholders at a shareholders' meeting, which is expected to take place in April 2008.