BA and Iberia merger to be finalized this month

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The lengthy process in the joining-up of British Airways and Iberia is expected to be completed by the end of this month.

BA has accepted the proposal made by Iberia which would see the Spanish carrier controlling 45 per cent of the merged carrier,  and British Airways controlling 55 per cent, according to a source close to the deal. BA had originally sought a 65 per cent interest.

Iberia made its bid for an increased share after its market value increased relative to that of British Airways. BA saw a decline in value due to the weakened pound and a sharp drop in premium-class passenger traffic.

The location of the new headquarters is still under negotiation, as is the composition of the executive group to lead the merged entity.

Willie Walsh, the chief executive of British Airways, said that the two companies have been discussing the parent company’s role, but did not offer any details.

The announcement of the plan to merge was made by the two carriers last summer, after numerous years of code- and flight-sharing. The merger will make it possible for BA to offer routes in Latin America, through the Iberia network, and Iberia will be able to redirect its North American services through the BA in London, helping reduce costs.

The savings generated by the merger will help offset the high cost of fuel and the impact of the decline in demand for air travel.

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