When Macquarie Equities allows itself to be reported as saying Malaysia Airlines would be ‘a better fit’ for Qantas, and the general media breaks out in a sweat over a fictitious story in a Kuala Lumpur newspaper that Jetstar is discussing a merger with AirAsia it means that the silly season for Qantas merger fantasy stories is in full swing.

Let’s start with a few words from the government that set the parameters for a permissible merger of Qantas with anyone. Qantas will remain Qantas. It will continue to fly within and beyond Australia. Its shareholders will be majority Australian domiciled and the board will be two thirds comprised of Australian nationals.

If Qantas merges into a dual or multi-listed structure under an umbrella entity it will be the dominant partner in that managing entity forever as well. Confirmation of this came from the Minister’s spokesperson. Under no circumstances would control over Qantas be exercised from abroad. The merged entity will be headquartered in Australia, controlled from Australia, and … so forth. This is more than a fairly exhaustive way for the Australian government to say ‘Never.’ It also sets conditions that no British, European, American, Chinese, Japanese or Asian government is ever going to accept for any of their major flag carriers.

But still the stories come. Clearly the work experience kid is running the shop at Macquarie Equities and took a call from someone desperate to write a beat up.

Mergers and acquisitions involve money. There is no private equity money out there of the required scale for a massive airline restructuring. Public equity is in a bunker waiting for the shelling to stop. Air travellers are no longer travelling in the same numbers.

And apart from that, Qantas has said it isn’t talking to any other airlines about mergers or acquisitions anyhow.

The real stories about even strong carriers like Qantas, or Singapore Airlines, or Cathay Pacific, will be how they cope with the bad times, rather than spending or raising monies they cannot sustain in tougher times.

The stress points to watch for in Qantas and Singapore Airlines will be around the fringes of their low cost franchises in Jetstar and Tiger respectively. The core domestic or regional activities of these carriers are reporting sound figures. But the issue is what happens to Tiger Australia, or Tiger in north Asia, or Jetstar Asia based in Singapore or Jetstar Pacific based in Vietnam. This is not to predict their demise, but rather to look closely at the enormous gap between what was supposed to happen and the poor results to date.

Both Qantas and Singapore Airlines have a stake in orders for around 130 A320 single aisle jets for these low cost trans border franchises based on forecast levels of demand that look increasingly implausible.

Isn’t it fair to suggest that in terms of agendas, airline rationalisation is off, but rationality is on.

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