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29/07/2008
BA And Iberia In Merger Talks
The UK's 'flag-carrier' British Airways and Spanish airline, Iberia are holding talks with a view to an "all-share" merger.
The deal would allow the companies to combine nearly all aspects of their operations including sales, purchases and marketing.
The firms say that the British Airways and Iberia brands would be retained as part of any new, combined group.
Earlier this year, BA was in talks with US-based AA and Continental, about creating an alliance but Continental backed out.
BA and AA are now continuing their discussions and have invited Iberia to be the third member.
It is understood that if BA and AA seek regulatory approval to merge their operations, it will be their third attempt having been blocked in 1998 and 2001.
However, the European Union has already granted BA and Iberia approval to co-operate widely.
British Airway's Chief Executive, Willie Walsh said: "The aviation landscape is changing and airline consolidation is long overdue.
"The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment.
"We've had a successful relationship with Iberia for a decade and are confident that both companies' shareholders would benefit from the proposed tie-up," he said.
Iberia's Chairman and Chief Executive, Fernando Conte, said: "A merger would be good news for our customers and enhance our existing relationship.
"We've worked together for nearly 10 years and a tie-up would build on that success. It would also strengthen the one-world alliance and further develop Madrid's position as the European gateway to Latin America."
The news of a potential merger with Iberia has boosted BA's share price by 8%.
However, BA has separately warned that it may struggle to stay profitable this year - in common with many other airlines - being hit by rising fuel costs and the global credit crunch.
AA lost $328 million (£164.7 million) and Iberia $28.3 million (£22.5 million) in the first quarter of this year.
Meanwhile, BA has just announced that it has bought L'Avion, a French business class-only airline for £54 million.
(DS)
The deal would allow the companies to combine nearly all aspects of their operations including sales, purchases and marketing.
The firms say that the British Airways and Iberia brands would be retained as part of any new, combined group.
Earlier this year, BA was in talks with US-based AA and Continental, about creating an alliance but Continental backed out.
BA and AA are now continuing their discussions and have invited Iberia to be the third member.
It is understood that if BA and AA seek regulatory approval to merge their operations, it will be their third attempt having been blocked in 1998 and 2001.
However, the European Union has already granted BA and Iberia approval to co-operate widely.
British Airway's Chief Executive, Willie Walsh said: "The aviation landscape is changing and airline consolidation is long overdue.
"The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment.
"We've had a successful relationship with Iberia for a decade and are confident that both companies' shareholders would benefit from the proposed tie-up," he said.
Iberia's Chairman and Chief Executive, Fernando Conte, said: "A merger would be good news for our customers and enhance our existing relationship.
"We've worked together for nearly 10 years and a tie-up would build on that success. It would also strengthen the one-world alliance and further develop Madrid's position as the European gateway to Latin America."
The news of a potential merger with Iberia has boosted BA's share price by 8%.
However, BA has separately warned that it may struggle to stay profitable this year - in common with many other airlines - being hit by rising fuel costs and the global credit crunch.
AA lost $328 million (£164.7 million) and Iberia $28.3 million (£22.5 million) in the first quarter of this year.
Meanwhile, BA has just announced that it has bought L'Avion, a French business class-only airline for £54 million.
(DS)
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