BA and Iberia consider merger deal

Nov 12 2009

British Airways looks to be on the brink of a merger with Spanish airline Iberia after the boards of both firms met to consider a deal.

BA, which announced record first-half losses last week, said both companies were meeting separately to discuss a "potential transaction".

The pair first revealed merger talks in July 2008 although the recession forced the deal to be shelved.

BA - whose shares rose almost 8% - said no decisions had been taken and there was "no guarantee" of a merger, although reports suggested the outline of a deal could be announced alongside Iberia's results on Friday.

Both companies have been hit hard by falling air travel in an 18-month period which has seen many smaller airlines go to the wall. A tie-up would put the pair on a firmer footing.

BA also held talks with Australian airline Qantas over a tie-up but the talks ended in December last year after the pair were unable to agree terms.

The two airlines are members of the Oneworld Alliance and already jointly market, or codeshare, on some routes.

BA also owns a 13.15% stake in the Spanish airline, while Iberia has a near-10% stake in the UK carrier.

A merger would create an airline carrying around 60 million passengers a year with a fleet of more than 400 aircraft.

BA, which has a fleet of 246 planes, carried 33 million passengers last year, while Iberia carried 28.5 million travellers and has 174 aircraft.