CIG has learned that British Airways and Spain’s Iberia have recently announced a $7 billion agreement after a full 16 months of negotiation, to create one of the globes largest airlines.
In terms of the merger agreement BA would control 55% of the united company with Iberia owning the remainder, CIG understands both companies as saying in a joint press release. The present head of BA Willie Walsh would stay on as chief executive of the united company, while the Iberia headman would move into the position of chairman.
The Spanish airline announced that the merger, which is still awaiting shareholder and regulatory approval, was expected to be wrapped up in the first quarter of 2010.
A severe decline in sold seats due to the global financial crisis pushed airlines to look at joining up with competitors in acquisitions and alliances enabling profit sharing, streamlined staff quotas, route coordination and greater joint resources for capital investment.
In similar recent moves Germany’s Lufthansa acquired the 20% of British Midlands it did not already own in October, and Delta pushed to grow its partnership with Air France-KLM.
The union would see a company with around $22 billion in revenues and result in a yearly cost cutting of around $590 million, CIG believes the airlines having said.
