British Airways interested in investing more in Iberia

20 March 2008

LONDON – British Airways said Wednesday it had raised its stake in Iberia and was interested in investing more in the leading Spanish carrier. In a statement to the London stock exchange, the British airline said it had acquired a further 28.7 million Iberia shares, raising its holding to 13.15 percent from 10.13 percent. BA paid a total EUR67 million for the additional stake at an average price of EUR 2.34 per share.

"This investment reflects the strategic importance we attach to our relationship with Iberia and our continued confidence in its management," BA Chief Executive Officer Willie Walsh said.
"We will consider further opportunities to increase our stake," BA’s Walsh added.

Iberia was by far the best performing stock yesterday in the Spanish blue-chip Ibex 35 index. Its share price added 3.72 percent to EUR 2.51 after a high of EUR 2.54.

Iberia has received a number off takeover approaches since the United States and the European Union signed an open-skies deal last year. One of these was from a consortium led by private equity firm Texas Pacific, and which included BA. Another consortium of Spanish investors, led by Gala Capital, also expressed interest in Iberia.

The speculation pushed Iberia’s share price to a high of EUR 4.16 last year but takeover talks cooled after Spanish savings bank Caja Madrid raised its interest in the airline to 23 percent. The TPG consortium then dropped its interest after having tabled a tentative offer of EUR 3.60 per share.

The Spanish airline has acknowledged that consolidation in the airline industry is inevitable and wants to take an active part in the process.

Iberia booked a net profit of EUR 328 million last year, with its earnings boosted by its lucrative Latin American routes, one its most attractive features for potential buyers.

BA, meanwhile, has been in talks with Caja Madrid this year on strengthening the alliance between the two airlines. The chairman of the savings bank, Miguel Blesa, said if BA was not interested in such an accord, Iberia would look for partners elsewhere.

Blesa named Germany’s Lufthansa and Air France-KLM as possible partners. Earlier this week, The French-Dutch carrier launched a takeover bid for Alitalia, which was accepted by the Italian airline’s board.