SPAIN / FILE: British Airways and Iberia in merger talks to form world's third largest airline in income terms with the fifth largest fleet
Record ID:
721314
SPAIN / FILE: British Airways and Iberia in merger talks to form world's third largest airline in income terms with the fifth largest fleet
- Title: SPAIN / FILE: British Airways and Iberia in merger talks to form world's third largest airline in income terms with the fifth largest fleet
- Date: 30th July 2008
- Summary: FILE (REUTERS) PASSENGERS BOARDING BRITISH AIRWAYS AIRBUS AT GIBRALTAR AIRPORT PEOPLE WATCHING BRITISH AIRWAYS TAKING OFF PEOPLE WATCHING IBERIA AIRBUS LANDING IBERIA AIRBUS TAXIING ON TARMAC GIBRALTAR POLICE ON TARMAC MORE OF AIRBUS TAXIING GIBRALTAR OFFICIALS ON TARMAC/ SIGN READS WELCOME TO GIBRALTAR
- Embargoed: 14th August 2008 13:00
- Keywords:
- Topics: Transport
- Reuters ID: LVA6DHXO9OPUOIP0R09H98CWOB06
- Story Text: British Airways and Spain's Iberia are in talks to forge the latest in a series of European airline mergers that could also form the basis of a three-way transatlantic tie-up.
The UK carrier said on Tuesday (July 29) the talks were about a potential all-share merger, sending shares in both carriers higher. It said in a statement the discussions had the support of both companies, though it expected it would take several months before terms could be agreed.
BA Chief Executive Willie Walsh said the move made sense in current market conditions with two strong airlines coming together to complement one another.
At a joint news conference with Iberia, Walsh also said alliance talks with U.S. carrier American Airlines (AA) were continuing and AA welcomed the Iberia merger talks.
BA's shares were up 6.6 percent at news of the talks, valuing the company at 2.9 billion pounds ($5.76 billion). Shares in Iberia, the smaller carrier, worth about 1.5 billion euros ($2.36 billion), were suspended up 4 percent. They had risen sharply before the announcement.
A fresh wave of consolidation has been expected among European airlines seeking to fight the twin threats of soaring fuel costs and falling consumer demand. Air France and Dutch carrier KLM became Europe's biggest carrier by merging earlier this decade.
Iberia's Chairman and Chief Executive Fernando Conte told reporters that the nature of the merger talks was different to that of Air France and KLM as the financial situation was not the same.
Although British Airways was obviously bigger than Iberia, he said Iberia had a similar healthy financial situation.
BA was part of a consortium led by private equity group TPG that withdrew a 3.4 billion euro bid for Iberia last November. TPG declined to comment on Tuesday.
BA has been a shareholder of Iberia for nearly 10 years and currently owns 13.15 percent of the Spanish carrier, while Iberia has taken a 2.99 percent direct stake in BA, on top of exposure to a further 6.99 percent through contracts for differences linked to the BA share price.
BA's Walsh said that the aviation industry was shifting and airline consolidation was long "overdue".
"By joining together, British Airways and Iberia will be a stronger force, better able to compete in today's tough market environment. We would create the third largest airline in the world in terms of income, more than 16.5 billion euros. With the fifth largest fleet of nearly 450 aircraft."
The merged company would fly to more than 200 destinations around the world.
BA said both parties were confident of securing regulatory approval, adding that the European Union had already allowed the duo to cooperate widely.
However, a spokesman for BA rival Virgin Atlantic said the deal would work out badly for passengers.
A spokesperson for Air France/KLM, Europe's biggest airline, declined to comment. - Copyright Holder: REUTERS
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