BA and Iberia merger set for take-off after deal on funding of £3.7bn pension deficit
Friday 24 September 2010
The merger between British Airways and Iberia has cleared its last hurdle, with the Spanish flagcarrier's agreement to BA's plans for funding its £3.7bn pension deficit.
Iberia retained the right to walk away from the £5bn deal pending consideration of BA proposals to deal with the black hole in its pension scheme, published in June. But Iberia's board has now cleared the British company's plans to set aside at least £330m every year until 2026, and the tie-up creating the world's second most valuable airline will proceed as planned.
"This decision represents another step forward in the merger process," Iberia said in a statement following its board meeting on Wednesday.
The merger has already been approved by Europe's competition watchdog. All that remains is formal shareholder sign-off of the plan – expected at a meeting in November – and the deal is set to be completed by the end of the year.
The new group – called International Airlines Group (IAG) – will be 56 per cent-owned by BA shareholders, with the remaining 44 per cent held by Iberia's investors.
Willie Walsh, the BA chief executive, will become the boss of IAG. Antonio Vazquez, who is currently the Iberia chief executive, is set to become the chairman.
Mr Walsh has already signalled his intention to make a string of further acquisitions to turn IAG into the world's biggest airline. Earlier this month, Mr Walsh revealed he has a list of 12 potential takeover targets, from an initial list of 40. Although he refused to name names, experts tip Chile's LAN Airlines, Australia's Qantas, and India's Kingfisher as possible candidates.
BA is already pursuing closer links with American Airlines, a counterpart in the OneWorld alliance. Restrictive foreign ownership rules in the US rule out a formal merger, but plans for a tie-up on vital transatlantic routes were signed off earlier this year by European and US monopoly authorities.
The consolidation plans come as BA is fighting to return to profitability after record losses caused by the recession. The group has faced 22 days of strikes this year, at an estimated cost of £150m, in protest against changes to terms and conditions and reductions in the number of staff on flights.
Talks between the two sides reached an impasse after efforts to reach an agreement on the original dispute foundered over claims by the Unite trade union that BA is victimising striking staff by withdrawing travel perks. Earlier this month, Unite's joint general secretary, Tony Woodley, said the union remained committed to finding a settlement, but accused BA of trying to "destroy trade unionism".
BA's shares were flat yesterday, down 0.3p at 239.7p.
As Voltaire once said, “Ice cream is exquisite. What a pity it isn’t illegal”
- 1 Mother fed her daughter tapeworms to make her skinny for beauty pageant
- 2 Crystal Palace next manager latest: Palace consider Ally McCoist - EXCLUSIVE
- 3 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 4 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 5 Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'
'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
West poised to join forces with Assad in face of Islamic State
Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
James Foley 'beheaded': Isis video shows militant with British accent 'execute US journalist' – as hunt begins for killer
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
Bin bag full of cats' heads discovered near Manchester's Curry Mile
iJobs Money & Business
Negotiable: Harrington Starr: Market Administrator (1st line Support, Trade Fl...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...
Negotiable: Harrington Starr: Data Support Analyst (Linux, Solaris, Windows Se...
Negotiable: Harrington Starr: Helpdesk Support Engineer (Windows, MS Office, E...