BA and Iberia reach preliminary merger deal

It has been confirmed that British Airways (BA) and Spanish airline Iberia have reached a preliminary merger agreement.

Merger talks took place between both companies yesterday and the deal is understood to give Iberia 45% and BA 55% of a newly merged company.

The combined firm would create Europe’s third largest airline and have 419 aircraft flying to 205 destinations.

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.

BA‘s chief executive, Willie Walsh, has said the planned merger with Iberia is “great news for British Airways, our customers and our shareholders”.

However, according to reports, Iberia could terminate the merger if “the outcome of the discussions between British Airways and its pension trustees is not, in Iberia’s reasonable opinion, satisfactory because it is materially detrimental to the economic premises of the proposed merger”.

Mr Walsh was asked whether the deal would result in job losses but he replied: “I don’t think staff will be worried, consolidation is part of our industry.”

The deal was welcomed by many but Sir Richard Branson’s Virgin Atlantic, one of BA’s major UK competitors, is opposed to the merger.

Virgin said: “The merger will increase BA’s dominance at Heathrow with 44% of take-off and landing slots this winter. It is impossible for any other airline to replicate their scale.”

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.

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