British Airways has confirmed that they are in talks with Iberia over a possible merger. Following a failed bid last year, British Airways insist that fresh merger talks are backed "unanimously" by the boards of both airlines. Should the talks be successful, both brands of BA and Iberia are to be retained as a combined group, whilst the merger would also involve a share swap. BA already has a stake of just over 13% in the Spanish flag carrier, whilst it was announced today that Iberia has now taken a 3% stake in BA.
Crucially, both companies would complement each another, with BA benefiting from huge success in the North Atlantic as well as boasting the lion’s share of slots at Heathrow. Iberia meanwhile, currently enjoys its status as the largest airlines between Europe and Latin America.
British Airways chief executive Willie Walsh stated: "The aviation landscape is changing and airline consolidation is overdue. The combined balance sheet, anticipated synergies and network fit make a merger attractive, particularly in the current economic climate. We’ve had a successful relationship with Iberia for a decade and are confident that both companies' shareholders would benefit from the proposed tie-up."
Iberia chairman and chief executive Fernando Conte commented: "A merger would be good news for our customers and enhance our existing relationship. We've worked together for nearly 10 years and a tie-up would build on that success...We have worked together for nearly 10 years and a tie-up would build on that success and develop Madrid's position as the European gateway to Latin America."
Although the talks could several months to reach an agreement, both parties are confident of securing EU approval following 10 years of close co-operation. Virgin Atlantic meanwhile, which currently holds 2.5% of Heathrow’s slots, has claimed that the proposed merger would forge an “anti-competitive monopoly”, allowing the new carrier to raise fares and limit future competition. It remains to be seen whether Virgin will lodge a formal objection to the EU.
