Caja Madrid looks to British Airways as stable ally in Iberia

23 January 2008

MADRID – Caja Madrid, Iberia’s leading shareholder, said Tuesday it wants a "stable alliance" with British Airways in the Spanish airline.

Caja Madrid, Spain’s second-biggest savings bank, has been in talks on the future of BA, which holds 10 percent of Iberia. BA dropped plans for a takeover bid for the Spanish carrier last year.

Speaking at a news conference to present the savings bank’s results for 2007, Caja Madrid Chairman Miguel Blesa said that if BA was not interested in such an accord, Iberia would look for partners elsewhere.

The European airline industry is ripe for consolidation amid tighter competition and soaring fuel prices.

"Iberia needs to redefine its future within the European air transport industry," Blesa said. To do so it needs a "stable alliance" with one of the three big operators: BA, Lufthansa and Air France business, he added.

Caja Madrid posted a net profit of EUR 2.861 billion last year, an increase of 177 percent over a year earlier. Earnings were posted by the sale of its 10-percent stake in Endesa as part of a takeover bid for the electricity company, which generated a capital gain of EUR 2.333 billion. Without that one-off gain, recurrent earnings were up 40 percent, with solid growth in all margins.

Subject: Spanish news