BA, Iberia Agree on Merger

London – British Airways and Spain’s Iberia said November 12 they have struck a preliminary agreement for a merger.

BA will own 55 percent of the new carrier and Iberia 45 percent, the airlines said in a joint statement.

The carriers’ boards held separate meetings in London and Madrid throughout the day Thursday to finalize details of the merger that will create the world’s third largest airline by revenue. Their combined sales totaled $21.7 billion in 2008.

The new airline will have cargo business of a million metric tons a year, third largest in Europe after Air France-KLM and Lufthansa.

Iberia’s chairman Antonio Vazquez will be chairman of the new airline and BA chief executive Willie Walsh will be its CEO.

The merger is expected to be formalized in the first quarter of 2010 and closed by the end of the year, the companies said.

Iberia has reserved the right to pull out of the agreement if there is no “reasonably satisfactory” agreement between BA and the administrators of its pension scheme which has seen its deficit double in the past year to around $4.4 billion.

BA already owns 13.5 percent of Iberia and the two carriers are partners in the OneWorld airline alliance. They are also seeking anti-trust immunity from U.S. regulators for a trans-Atlantic joint venture with American Airlines.

Contact Bruce Barnard at brucebarnard47@hotmail.com.