BA and Iberia set to merge in £4bn deal
BA’s Willie Walsh seeks to put the chaotic move to Heathrow’s Terminal 5 behind him
British Airways and Spanish carrier Iberia have started merger talks in a bid to create Europe’s third-largest airline, they announced yesterday.
The two carriers, currently fourth and sixth in Europe by value, are working on a friendly all-share deal with the full support of both boards. BA already owns 13.15 per cent of Iberia, with the Spanish firm owning 2.99 per cent of its British counterpart.
British Airways and Spanish carrier Iberia have started merger talks in a bid to create Europe’s third-largest airline, they announced yesterday. The two carriers, currently fourth and sixth in Europe by value, are working on a friendly all-share deal with the full support of both boards. BA already owns 13.15 per cent of Iberia, with the Spanish firm owning 2.99 per cent of its British counterpart.
A fresh wave of consolidation has been expected among airlines seeking to fight the twin threats of soaring fuel costs and falling consumer demand.
BA will be able to take advantage of Iberia’s Madrid hub, the gateway to Latin America. Iberia will be able to use BA’s prized Heathrow routes to North America. A holding company would be created with listings in London and Madrid – but the two airlines would still run their own day to day operations and retain separate brands.
Last year, BA considered taking part in a bid for Iberia led by private equity firm TPG, but the deal collapsed because the Spanish carrier’s board was split over the deal. BA’s shares closed up 6 per cent at 248.5p valuing the business at £2.9bn. Iberia closed up 21 per cent, giving it a market capitalisation of £1.3bn.