BA shareholders back landmark Iberia merger

29th November 2010, Comments 0 comments

British Airways shareholders on Monday backed the airline's landmark multi-billion-euro merger with Spanish carrier Iberia that will create Europe's second biggest airline.

"We are delighted that our shareholders have approved our merger with Iberia and await the result of the Iberia shareholder meeting," BA said in a short statement.

The deal was backed with an overwhelming 99-percent majority, a spokesman said, but freezing weather and Tube strikes meant that very few shareholders turned up to the London vote.

Iberia shareholders were currently meeting on whether to back the tie-up worth more than 6.0 billion euros (8.0 billion dollars).

The boards of the British and Spanish airlines agreed a deal in April, while EU competition regulators have also given the green light for a full alliance.

A merger allows the two carriers to catch up with rivals such as Air France-KLM and Lufthansa, according to analysts.

BA is meanwhile set to benefit from Iberia's strong presence in Latin America, while the Spanish airline will gain from the British carrier's strength in North America.

A tie-up, on schedule to be completed in January, would create Europe's second-biggest airline by market capitalisation after Germany's Lufthansa, and fly 60 million passengers a year.

BA and Iberia sought to merge as the global economic downturn and the rise of low-cost airlines resulted in steep losses for traditional carriers.

However since the tie-up announcement, the pair have overcome travel chaos due to strikes and the volcanic ash cloud to post healthy returns to profit, indicating that the sector is on a path to recovery after the deep recession.

The landmark Anglo-Spanish deal would create annual savings of around 400 million euros by the fifth year of the merger, which would see the creation of a new holding company with a primary shares listing in London.

BA would hold 55 percent of the new capital and Iberia 45 percent.

As part of new holding company International Airlines Group, BA and Iberia would each retain their current operations and individual brands.

Current BA chief executive Willie Walsh would become chief executive of the new group and Iberia chairman Antonio Vazquez would be chairman.

© 2010 AFP

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