BA looks to seal Iberia deal by Christmas
Wednesday 30 September 2009
British Airways could wrap up a merger deal with Spanish flag carrier Iberia by the end of the year, according to its chief executive Willie Walsh.
Conceding that the 14 month old talks have already dragged on too long, the British Airways boss said that the £4.2bn all-share deal has been given fresh impetus by the appointment of a new chairman at Iberia. Antonio Vazquez was hired in the summer and has a pedigree as a deal maker after negotiating Altadis’s sale to Imperial Tobacco, when he was chairman of the Spanish cigarette marker.
Asked if a deal would be completed by Christmas, Mr Walsh said: “I’m not prepared to say whether we will do the deal or not. It must make sense for our shareholders and to get to an agreement we need to go through the detail.
“We have been making good progress since the change of leadership at Iberia. We have met them on three occasions and we are meeting them again in the next few weeks,” he added.
British Airways’ chairman Martin Broughton echoed Mr Walsh’s comments, saying “we will know fairly soon yes or no, There is a renewed sense of urgency.”
The stumbling block to a deal has been BA’s estimated £3bn pension fund deficit, but Mr Walsh says that he now believes Iberia is sufficiently well versed in the details to do a deal before actuarial updates next year.
The BA boss also opened up another rift with bitter rival Virgin Atlantic by suggesting he would be prepared to buy BMI from German airliner Lufthansa, “I’m not going to signal what I’m willing to pay for it but if Lufthansa are willing to sell it, we would make a serious offer,” said Mr Walsh, who added that he thinks he could outbid Sir Richard Branson’s Virgin.
The Conservative party has indicated that it is opposed to expansion at Heathrow, and would not support the building of a third runway at the airport. While BA is yet to indicate how it would finance a deal for BMI, which Lufthansa acquired for £223m from former chairman Sir Michael Bishop earlier this year, it is thought BA would be interested in acquiring BMI’s 11 per cent of takeoff and landing slots at Heathrow to compensate for the lack of growth at the airport.
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