Iberia says it won't cancel BA merger over pensions deficit
A merger between Iberia and British Airways moved a step closer on Wednesday after the Spanish carrier said it had decided not to exercise its right to cancel the deal over BA's pensions deficit.
BA's employees' pensions deficit of 3.7 billion pounds (4.3 billion euros, 5.8 billion dollars) has been a major sticking point in the planned merger to create Europe's second-biggest airline by market value after Lufthansa.
BA said in June it had agreed a recovery plan to address the deficit under which it would set aside at least 330 million pounds a year until 2026.
Iberia announced its board decided on Wednesday "not to exercise its right to cancel the Merger Contract with British Airways in relation to the agreement reached between the latter and the trustees of its pension funds.
"This decision represents another step forward in the merger process, which will be completed when the Shareholders General Meeting takes place, expected in November," it said in a statement on its website.
The two airlines signed the merger deal on April 8 to compete more effectively in the fast-consolidating aviation sector.
The executive European Commission gave the green light to the deal on July 14, and the two groups are to make a definitive announcement in November.
The tie-up would combine Iberia's strong position in Latin America with BA's presence in Africa, Asia and North America.
© 2010 AFP