Merger between Iberia and British Airways

Merger between Iberia and British Airways

British Airways (BA) and Iberia have reached a preliminary merger agreement. The agreement, reached after more than a year of negotiations, is expected to be completed by the end of 2010.

If produced, the merger will create the world's third-largest airline, with 419 aircraft flying to 205 destinations.

Under the terms of the agreement, the Spanish airline will have 45% of the shares of the new company and British Airways 55%.

British Airways and Iberia will operate independently, just as Air France and KLM maintained their different identities after merging in 2004. A holding company will be established in Madrid, but the company's headquarters will be in London. Willie Walsh, CEO of BA, will continue as CEO of the new airline after the merger while Antonio Vazquez, President and CEO of Iberia, will become President of the company.

The agreement is expected to save 400 million pounds by the fifth year of operations. Since BA has a dominant position in flights to North America and Asia and Iberia is the main operator in flights to South America, the savings would come from the joint sale of flights, combining its IT systems and aircraft, as well as the maintenance of the fleet. . However, some layoffs are expected during the process.

Walsh, quoted by The Independent, noted: "This is a merger of equals and BA is very happy that the group's headquarters will be in London."
“The merger will create a strong European airline, perfectly capable of competing in the 21st century. Both airlines will retain their brands and heritage, while achieving significant synergies as a single force. "

However, the road to merger will probably not be easy. Iberia could dissolve the deal if British Airways fails to resolve its pension deficit problems.

Rival carrier Virgin said in a statement that regulators should be on the lookout for "increasing dominance" by BA. The agreement will also need the approval of the European Commission.

For his part, the exalted CEO of Ryanair, Michael O'Leary, commented in an interview quoted in Bloomberg: "It reminds me of two drunks leaning on each other."
"If you combine an expensive and losing airline with another expensive and losing airline, you will get an airline with even higher prices and much greater losses," he added.

Source: Cheapflights News

Video: BA and Iberia in merger talks (January 2022).