British Airways and Iberia are holding talks with a view to an all-share merger between the two companies. The negotiations are supported unanimously by the boards of both companies.

The British Airways and Iberia brands would be retained as part of a combined group.

 

Iberia's chairman and chief executive, Fernando Conte, said: "A merger would be good news for our customers and enhance our existing relationship. We've worked together for nearly 10 years and a tie-up would build on that success. It would also strengthen the oneworld alliance and further develop Madrid's position as the European gateway to Latin America".

British Airways' chief executive, Willie Walsh, said: "The aviation landscape is changing and airline consolidation is long overdue. The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment. We've had a successful relationship with Iberia for a decade and are confident that both companies' shareholders would benefit from the proposed tie-up".

British Airways acquired a nine per cent shareholding in Iberia in 1999 and has recently increased its shareholding to 13.15 per cent. Iberia has announced today that it has recently acquired a 2.99 per cent direct shareholding in British Airways and financial exposure to a further 6.99 per cent through contracts for difference linked to British Airways' share price. The airlines' shareholdings reinforce the mutual interest of both companies in each other.

It is expected that it will take several months to reach agreement on the terms of the merger and to finalise a joint business and integration plan for the combined group.

Both parties are confident of securing regulatory approval. The European Union has already granted British Airways and Iberia approval to co-operate widely.

British Airways press release, July 29 2008, London