Iberia and British Airways Reach Merger Agreement

It now seems that the well known Spanish airline, Iberia, and British Airways have just announced that they have reached a preliminary agreement for a merger. This announcement came just following a meeting that took place late last week.

In a new join statement by the two airlines, they announced that British Airways would control about 55 percent of the new company and Iberia would hold the remaining 45 percent. The two companies also feel that the new merger would create about 400 million euros of synergies.

As of right now, British Airways already owns around 13.5 percent of Iberia. The two carriers also have a code share agreement under the Oneworld alliance. Iberia’s current chairman, Antonio Vazquez, will be the new chairman for the new company. The Chief Executive of British Airways, Willie Walsh, will be the new CEO of the new company.

The deal is set to be formalized in the early part of next year and then be finalized by the end of next year. The closing of the deal is still far off for a few reasons. First of all, Iberia is still a little concerned over the British Airways pension deficit. Next the merger still has to get regulatory approval from the European Commission. However, following Air France’s successful merger with Dutch airline KLM back in 2004, it is unlikely that this approval will affect the outcome.

Just recently British Airways announced pretax losses of about £292 million in the six months to the end of September. Iberia just recently showed reports of losing €72.8 million between April and June.