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British Airways and Iberia sign merger agreement

8-Apr-2010 4:20 PM

British Airways and Iberia signed (08-Apr-2010) a merger agreement, with terms of the merger agreement consistent with the binding MoU signed between the two airlines in Nov-2009. The carriers stated the agreement marks a "further step towards creating a new leading European airline group". Details include:

  • Completion date: The merger is expected to be completed in late 2010. The carriers stated they expect to present the transaction for shareholder approval in Nov-2010, with completion expected to occur approximately one month later;
  • Combined fleet/traffic/revenues: The new company will be one of the world’s largest airline groups, with 408 aircraft operating to 200 destinations and carrying more than 58 million passengers p/a. It has been structured so that it can take advantage of further consolidation in the global aviation industry. The carriers stated the new group will generate annual synergies of approximately EUR400 million by the fifth year of the merger;
  • Holding company: The merger will create a new holding company called International Consolidated Airlines Group SA which will be known as International Airlines Group. Both airlines will retain their current operations and operate under their individual brands - British Airways and Iberia;
  • Shareholding details: As detailed in the MoU, under the terms of the proposed merger, British Airways shareholders will receive one new ordinary share in International Airlines Group for every existing British Airways ordinary share held by them and Iberia shareholders will receive 1.0205 new ordinary shares for every existing Iberia ordinary share held by them. The treasury shares held by Iberia and the cross-shareholdings held by British Airways and Iberia in each other will not be eligible for International Airlines Group shares. As part of the transaction, it is expected that the treasury shares will be cancelled and the cross-shareholdings will remain at a subsidiary level. International Airlines Group will have a premium listing in the UK and its shares will be traded on the main market of the London Stock Exchange and it is envisaged they will be included in FTSE’s UK Index Series. In addition, the shares of International Airlines Group will be traded on the Spanish stock exchanges, through the Spanish Stock Exchanges Interconnection System (Mercado Continuo Español);
  • Regulatory approvals: The completion of the merger is subject to regulatory approval from the relevant competition authorities including the European Commission and approval by both British Airways and Iberia shareholders;
  • Pension recovery plan: As announced in the MOU, Iberia will be entitled to terminate the merger agreement "if the pension recovery plan agreed between British Airways and its pension trustees is not, in Iberia’s reasonable opinion, satisfactory because it is materially detrimental to the economic premises of the proposed merger". [more]

Iberia: “This is an important step in the process towards creating one of the world’s leading global airlines that will be better equipped to compete with other major airlines and participate in future industry consolidation. We look forward to concluding the deal before the year end," Antonio Vazquez, Chairman and CEO. Source: Company Statement, 08-Apr-2010.

British Airways: “The merged company will provide customers with a larger combined network. It will also have greater potential for further growth by optimising the dual hubs of London and Madrid and providing continued investment in new products and services,” Willie Walsh, CEO. Source: Company Statement, 08-Apr-2010