BA and Iberia vote for merger

Shareholders of British Airways and Spanish carrier Iberia today voted in favour of a £5 billion merger of the two airlines.

The green light from the shareholders means the creation of a new parent company for the two carriers - International Airlines Group (IAG).



The name BA will no longer be among those listed on the London Stock Market, with IAG taking its place when the deal is finally completed around January 21.



However, both airlines will keep their individual identities, with IAG's head office being in London and the new company's annual meetings being held in Madrid.



The merged airline will have 408 aircraft carrying about 57 million passengers a year.



Between them the two carriers have more than 57,000 staff and fly to more than 250 destinations.



One of the key benefits of the merger to BA is the access it will now get to South America.



At present BA flies to only three South American destinations - Rio de Janeiro and Sao Paulo in Brazil and Buenos Aires in Argentina.



Iberia also flies to these three cities, but also operates to eight other South American destinations.



Similarly, Iberia will gain from BA's more extensive North American operations, with the two carriers able to share information on fares, schedules and routes.



Shortly before Iberia's shareholders met in Madrid, BA chairman Martin Broughton told BA shareholders at a meeting in Westminster that the merger had a "compelling, strategic and financial logic" and would benefit staff, passengers and shareholders.



BA chief executive Willie Walsh said the merger would ensure BA could compete effectively with low-cost carriers.



After the vote, BA said: "This is an historic day for British Airways."



Peter Smith, travel analyst at http://www.travelsupermarket.com, said: "This merger, which will create the third biggest airline group in Europe, is good news for passengers in the long-term.



"It's all part of BA's drive to reduce costs and improve efficiency, allowing them to offer more affordable fares. The network of destinations available when booking with BA will increase by around 40%.



"Eventually passengers should expect to see better connections, improved timings and more choice of departures to and from Spain and to onward destinations. The airline market between the UK and Spain is one of the most competitive in the world with a rash of low-cost carriers operating routes so we can expect prices to stay low."



Mr Walsh will become the IAG chief executive, with BA's chief financial officer, Keith Williams, becoming the new BA chief executive.



Mr Williams' current BA position will be taken by Nick Swift, who is currently finance boss at transport company Go-Ahead.

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