Iberia stated (26-Oct-2010) it expects its merger with British Airways, which would create Europe's second largest airline by market value after Lufthansa, to be completed on 21-Jan-2011 subject to shareholder approval. Iberia has called an Extraordinary Shareholders Assembly for 28-Nov-2010 to vote on the planned merger while British Airways shareholders are scheduled to vote on the issue on 29-Nov-2010. The Boards of the two carriers, which have a combined market value of USD9.43 billion, have already approved to the merger which would create the International Airlines Group carrier. The airlines signed the merger agreement on 08-Apr-2010. The European Commission cleared the agreement in Jul-2010. Shares in both airlines are expected to stop trading on 20-Jan-2010 to be replaced by IAG shares which will commence trading on 24-Jan-2011. The two carriers expect the merger to generate cost saving of EUR400 million from the sixth year of the agreement with the new group to position itself for expected further consolidation in the global airline sector. Under the plan, British Airways will become an operating subsidiary of IAG with CFO Keith Williams assuming the role of CEO from Willie Walsh who will become CEO of IAG. Martin Broughton will continue as Chairman of British Airways while Iberia Chairman Antonio Vazquez will become Group Chairman. Mr Walsh will have a salary of GBP825,000 p/a as Chairman, a 22% increase from his current salary, with bonuses on top of this figure. Mr Vazquez will have a basic pay of GBP625,000 p/a compared to EUR337,000 (GBP294,000) at present while Mr Williams will witness a 56% increase in annual salary to GBP630,000. Iberia CEO Rafael Sanchez-Lozano Turmowill have a basic pay of EUR632,000. The two airlines issued documentation ahead of shareholders in advance of the meetings. A registration document for International Consolidated Airlines Group (IAG), the holding company of the new combined group, was also published. [more - Iberia Registration Document] [more - Shareholder Meeting Announcement] [more - Filing of Registration Document] [more - British Airways Merger and Shareholder Meeting Documents]
Iberia and British Airways expect merger to be completed on 21-Jan-2011
You may also be interested in the following articles...
IAG lowers plans for capacity growth, fleet investment & profit, but keeps return on capital target
IAG's Capital Markets Day on 4-Nov-2016 was the first since its formation in 2011 when it lowered any of its medium term financial targets. It cut its 2016-2020 average EBITDAR goal, in spite of adding in Aer Lingus for the first time. This followed two cuts to 2016 operating profit guidance during the course of this year, as a result of "a tough operating environment". It has been hit by adverse currency movements, mainly resulting from the UK's Brexit vote, in addition to ATC strikes and terrorist events.
To its credit, IAG has responded to the more challenging trading conditions by lowering its planned capacity growth and capital expenditure during its 2016-2020 strategic plan. These steps are necessary if it is to have a chance of meeting its ambitious goal to sustain a 15% return on invested capital. This target is unchanged, despite the lower profit outlook.
In 3Q2016, IAG's rolling four quarter return on capital fell, after rising more or less continuously since it began to target this measure in 2013. It has consistently been more profitable than either of its two main European legacy airline group rivals (Air France-KLM and Lufthansa). Nevertheless, the downward step highlights the challenge in meeting its own demanding target.
Ryanair's 117million pax in 2016 tops European airline groups. The first time an LCC topped rankings
For the first time ever in Europe, in 2016 a low cost airline carried more passengers than any other airline or airline group, as Ryanair's 117 million passengers pushed Lufthansa Group's 110 million into second place. Ryanair had beaten Lufthansa itself, but not the whole Lufthansa Group. IAG's first full year of including Aer Lingus helped it to take third place from Air France-KLM. Europe's number two LCC, easyJet, was ranked fifth.
The big five can be expanded into a big seven to include Turkish Airlines and the Aeroflot Group, although these two had contrasting growth rates in 2016. A chasing pack of middle sized airline groups includes three LCCs (Norwegian, Pegasus and Wizz Air) and three legacy airlines with varying challenges to establishing sustainable profitability (SAS, Air Berlin Group and Alitalia).
Most of the faster growing airline groups in the top 20 are LCCs and the main growth drivers for Europe's big three legacy groups are their LCC subsidiaries. Just outside the top 20 are some fast growing legacy airlines in Eastern Europe, demonstrating the potential there. Nevertheless, unless there is a big merger or acquisition, Ryanair looks set to remain at number one for some time.