Iberia on runway to flotation as BA takes pounds 160m stake
Thursday 16 December 1999
BA is one of seven corporate investors who have agreed to acquire 40 per cent of Iberia with the remainder of the airline due to be floated through a public share offer. The carrier is expected to be valued at between pounds 1.6bn and pounds 2bn.
Under the deal signed yesterday BA and American Airlines will buy a combined 10 per cent stake and become industrial partners in the Spanish carrier. Iberia will also join the Oneworld airline alliance led by BA and American.
BA, American and five Spanish companies yesterday paid half their combined pounds 700m investment with the balance due when the Spanish government clears the sale, probably before the end of the year.
The biggest single shareholder in Iberia will be Caja Madrid, Spain's second biggest savings bank, which will take a 10 per cent stake. However, BA will have more boardroom votes than any of the Spanish partners and the biggest say in the running of the airline.
BA has the right to sell its shareholding in Iberia back to the state holding company Sepi if the flotation has not taken place by the end of next year. It can also withdraw if the link up fails to gain European Commission approval.
Iberia has recently returned to profit after years of heavy losses. However, profits this year are only expected to reach around pounds 96m - half the level forecast - because of an industrial dispute and a price war.
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