British Air plans all-share merger with Spain’s Iberia
British Airways, Europe’s third-largest carrier, started talks to merge with Spain’s Iberia Lineas Aereas de Espana to lower expenses as slower economies and higher fuel costs wipe out earnings.
By Bloomberg |
LONDON: British Airways, Europe���s third-largest carrier, started talks to merge with Spain���s Iberia Lineas Aereas de Espana to lower expenses as slower economies and higher fuel costs wipe out earnings.
The airlines want to conduct an ���all-share merger,��� and planes would still fly using the two names, London-based British Airways said in a statement on Tuesday. Iberia rose 4.3% in Madrid before trading was halted, giving the carrier a market value of e1.63 billion ($2.6 billion). British Airways, at more than double Iberia's value, climbed 7.5% in London.
BA said two weeks ago it will cut passenger capacity and stop hiring as it struggles to make a profit. The UK carrier said it recently increased its stake in Iberia to 13.15% from 9%, with Spanish bank Caja Madrid holding 22.99%. Iberia said it has bought 2.99% of British Airways and holds a further 6.99% in contracts linked to BA���s share price.
���The aviation landscape is changing and airline consolidation is long overdue,��� British Airways chief executive officer Willie Walsh said in the statement. ���The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment.���
Record oil prices and slowing economies have prompted airlines to merge or strengthen partnerships. Iberia is attractive to suitors because of a route network that includes the highest density of services between European and Latin American cities such as Buenos Aires and Rio de Janeiro.
���There are some real revenue synergies here,��� said Gert Zonneveld, a London-based analyst at Panmure Gordon. ���There will be a level of costs that can be taken out of the business anywhere from finance to HR operation to looking at the fleet and engineering and maintenance costs.��� Zonneveld said a merger also ���makes sense��� because of Iberia���s Latin American network.
The airlines want to conduct an ���all-share merger,��� and planes would still fly using the two names, London-based British Airways said in a statement on Tuesday. Iberia rose 4.3% in Madrid before trading was halted, giving the carrier a market value of e1.63 billion ($2.6 billion). British Airways, at more than double Iberia's value, climbed 7.5% in London.
BA said two weeks ago it will cut passenger capacity and stop hiring as it struggles to make a profit. The UK carrier said it recently increased its stake in Iberia to 13.15% from 9%, with Spanish bank Caja Madrid holding 22.99%. Iberia said it has bought 2.99% of British Airways and holds a further 6.99% in contracts linked to BA���s share price.
���The aviation landscape is changing and airline consolidation is long overdue,��� British Airways chief executive officer Willie Walsh said in the statement. ���The combined balance sheet, anticipated synergies and network fit between the airlines make a merger an attractive proposition, particularly in the current economic environment.���
Record oil prices and slowing economies have prompted airlines to merge or strengthen partnerships. Iberia is attractive to suitors because of a route network that includes the highest density of services between European and Latin American cities such as Buenos Aires and Rio de Janeiro.
���There are some real revenue synergies here,��� said Gert Zonneveld, a London-based analyst at Panmure Gordon. ���There will be a level of costs that can be taken out of the business anywhere from finance to HR operation to looking at the fleet and engineering and maintenance costs.��� Zonneveld said a merger also ���makes sense��� because of Iberia���s Latin American network.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
