Iberia said to be nearing a deal with BA

SPANISH Airline Iberia said yesterday that it could conclude its merger talks with British Airways (BA) within months, but fell short of giving an exact date for completion of the deal.<br /><br />Speaking before a presentation in Madrid, Iberia&rsquo;s commercial director Manuel Lopez Colmenarejo said that corporate governance and the financial impact of BA&rsquo;s pension deficit remain the issues under discussion.<br /><br />BA said in September that the shortfall had widened to &pound;1.5bn as of 31 March, and will provide an update on the plan after actuaries complete the triennial review of the schemes, which started at the end of March and could take nearly a year.<br /><br />But independent pensions consultant John Ralfe has estimated that the British carrier&rsquo;s deficit is around &pound;3bn, meaning that BA has to contribute &pound;240m a year for 15 years to plug the hole, with payments adjusted for inflation.<br /><br />Iberia has suggested a mechanism under which the all-share merger ratio could be adjusted should the deficit widen, but BA believes its shareholders would reject the deal.<br /><br />The carrier has announced a loss before tax of &pound;401m for financial year to 31 March, down from a pre-tax profit of &pound;922m in 2008, its biggest full-year loss since privatisation on 1987. Iberia reported a first-quarter loss of &euro;92.6m (&pound;81.6m), compared with a &euro;500,000 loss a year earlier.