Iberia, BA seek merger as crisis invites tie-up

30th July 2008, Comments 0 comments

Spanish carrier Iberia and British airways will be the third-largest airline if talks to merge come through.

30 July 2008

MADRID - British Airways and leading Spanish carrier Iberia said Tuesday they were in talks to merge as they seek to cut costs to meet the challenge of soaring fuel prices and slowing demand.

The two companies are also in talks with US carrier AMR Corp's American Airlines to create what would be a three-party tie-up. BA and Iberia together would be the third-largest airline in the world in terms of revenues, which would amount to a combined EUR 16.5 billion.

Under what would be an all-share merger, BA and Iberia would retain their individual brands and set up a holding company which would trade on the Madrid Stock Exchange. The companies reckon it will take several months to decide the terms of the alliance and an integration and business plan.

After trading in Iberia's shares was briefly halted on Tuesday, its stock closed up 20.73 percent at EUR 1.98. That gave the former Spanish national flag carrier a market capitalisation of EUR 1.88 billion.

The share price of BA, whose market value is more than double Iberia's, closed up 5.97 percent.

In terms of market capitalisation, BA-Iberia would become the fifth-or sixth-largest airline in the world. "The aviation landscape is changing and airline consolidation is long overdue," BA chief executive Willie Walsh said.

[El Pais / Expatica]

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