BA and Iberia merger goes ahead

British Airways and Iberia will create one of the world’s biggest airlines following April 8 announcement that their proposed merger will go ahead.

The deal, which was provisionally agreed at the end of last year, is expected to be completed by the end of 2010 and is predicted to save the airlines €400 million a year by the fifth year.

BA and Iberia will continue to operate under their own brands, but once merged they will have 408 aircraft that fly to 200 destinations and carry more than 58 million passengers a year.

BA is expected to benefit from new routes to Africa and 13 new destinations in Latin America, while Iberia will benefit from access to 98 new destinations, mostly in the US and the east.

The merger will be implemented through the creation of a new holding company, which will be known as the International Airlines Group. It will be third largest airline in Europe and the sixth largest worldwide.

BA chief executive Willie Walsh said: “The merged company will provide customers with a larger combined network.

“It will also have greater potential for further growth by optimising the dual hubs of London and Madrid and providing continued investment in new products and services.”

Iberia chairman and chief executive Antonio Vazquez said: “This is an important step in the process towards creating one of the world’s leading global airlines that will be better equipped to compete with other major airlines and participate in future industry consolidation.”

The announcement is some good news for BA as it continues to battle with its 13,000 cabin crew and the union Unite over pay and working conditions. Crew striked for a total of seven days last month. Talks are ongoing between the two parties and further strike dates could be announced from April 14.