British Airways and Iberia merger takes off

Spain Business
British Airways and Iberia merger takes off
By h.b. - Nov 12, 2009 - 11:32 PM

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Photo EFE

The new merged airline will have its tax base in Spain but its main offices in London

The much heralded merger between Iberia and British Airways is on.
Antonio Vázquez, the current President of Iberia, will also be the President of the new airline formed by the merger, and Martin Broughton has been named as Deputy President.
The new airline will have its tax base in Spain, but its main offices in London.

The boards of both airlines agreed on Thursday the details of the plan which will be see the merger before November next year.
Each company will keep its own non-economic policy rights for the first five years of the merger, and each company will manage their relationship with their staff.

It comes as Iberia has seen its services disrupted by strike action by cabin crew, and with more stoppages threatened.
Both airlines have recently announced large losses.

It’s understood that the Chief Executive Officer will be the B.A. C.E.O. Willy Walsh.

The final contract on the definitive merger will be signed in the first quarter of 2010, and the union will result in a holding company called Top Co, whose shareholders will be the current BA and Iberia shareholders. The deal is that 45 British Airways shares will equal 55 Iberia shares.

Iberia shares rallied nearly 12% on the news which still needs approval by the BA board.

Also there is one veto which has been reserved by Iberia, and that is if British Airways fail to reach an agreement with the unions. B.A. still has to negotiate the details of a pensions plan worth 3 billion €.

The merged airline would have 419 planes and 205 destinations. Some 400 million € are forecast to be saved by eliminating duplicate services.

Iberia on Friday announced losses of 181.9 million for the year to September, compared to a profit of 51.1million for the same period last year.

(This story has been updated)