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BA & Iberia merger talks

5:20pm GMT, Thursday, 12 November 2009

BA and Iberia hold separate merger talks. BA and Iberia hold separate merger talks.

British Airways (BA) has said that it is holding a board meeting to discuss a “potential transaction” with Spanish airline Iberia, which could result in a merger of the two carriers.

Iberia is apparently holding its own board meeting to contemplate the deal and according to reports, it would hold a 45% holding and BA would hold a 55% holding in the proposed newly created company.

Reports are suggesting that the two airlines have already agreed to a merger and BA shares have increased admist the speculation.

A statement released by BA today has confirmed that the two parties are holding separate board meetings to discuss a potential merger. However, it said: “No decisions have been taken and, at this time, there can be no guarantee that a transaction will be forthcoming.”

Spanish newspaper El País has claimed that a deal has already been struck with Iberia Chairman Antonio Vásquez confirmed as the Chairman of the new company, which will be headquartered in London.

Last week BA announced that it was cutting 1,200 jobs after reporting a loss before tax of £292 million for the six months to 30 September. After a strong start to the year, BA has been considering staff reductions and pay freezes in order to survive.

BA Chief Executive Willie Walsh has previously said that a merger would help both parties given the current climate.

Iberia has been in the news this week as cabin crew have carried out a two-day strike and threatened further walk outs over the Christmas period because of pay issues.

BA has existing shares in Iberia and the two already have an agreement in place to sell seats on each others’ flights under the ‘One World’ grouping of airlines.

Even if the boards of the two airlines agreed to a merger, it would still require European Regulatory Approval.

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