BA shares up on Iberia merger talks

British Airways (BA) and Spanish airline Iberia are set to merge following talks at both companies.

Earlier today, BA said: “Further to recent market speculation, British Airways confirms that the British Airways and Iberia Boards are holding separate meetings today, 12 November, to consider a potential transaction.”

However, according to reports in Spanish newspaper, El Pais, Iberia agreed the new airline will have its financial headquarters in London.

According to reports, the deal would give Iberia 45% and BA 55% of a newly merged company.

Merger talks have been taking place at both companies for many years and today’s speculation sent shares in BA closing up 6.6% at 213.2p, making it the biggest riser on the FTSE 100. Shares in the Spanish airline were up 10.32% to €2.19.

If a merger is confirmed, it could be announced tomorrow, alongside Iberia’s third-quarter results.

BA already owns 13.5% of Iberia, and the two airlines have a code-sharing agreement under the One World global alliance, which allows them to sell seats on each other’s services.

The announcement comes just a week after BA posted a record first-half pre-tax loss of £292 million for the six months to 30 September.

Following its results, the airline said it was planning 1,200 job cuts, which will take its total to almost 5,000 by the end of March.

Meanwhile, it is understood that BA chief executive, Willie Walsh, will retain his position at the newly merged group. Last week, he described the current economic climate as a “very difficult time for the industry.”

The global economic downturn has led to a slump in demand. Many airlines have been forced out of business as fewer people are travelling by air.

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