BA, Iberia Shareholders Approve Merger
British Airways and Spain's Iberia got shareholders' stamp of approval for their USD$8 billion merger, opening the door to their plans to buy up other players in the airline sector.
The two companies, which announced merger plans in April, said investors had backed the combination at separate meetings on Monday.
BA and Iberia will become International Airlines Group when the deal is completed in late January. Shares in the new company, which will have a combined market value of around USD$9 billion, will be listed in London and Madrid.
The two airlines recently said they had identified possible acquisition targets to pursue once they have merged, with Asia seen as a key region for expansion.
"I think we have a magnificent vehicle to be in the driving seat of sector consolidation," Iberia chairman Antonio Vazquez told reporters after its shareholders' meeting in Madrid, but said the company was not yet in talks with any potential partners.
BA chief executive Willie Walsh downplayed concerns about Spain's economic problems and highlighted the strength of Iberia's Latin American network.
"This merger is good news for passengers in the long term," Travelsupermarket analyst Peter Smith said.
"The network of destinations available when booking with BA will increase by around 40 percent as Iberia's extensive Latin American, Spanish Caribbean and Spanish routes are incorporated into the overall offering."
BA STRIKE VOTE
After the merger is rubber-stamped, the Unite union said BA cabin crew would be balloted on whether to hold further strikes in a long-running dispute over changes to working practice which has already cost the airline some GBP£150 million (USD$233 million).
Cabin crew have already held a series of walkouts over the disagreement.
The pair's tie-up was all but secured in June when the British airline agreed a recovery plan for its GBP£3.7 billion pension deficit, removing one of the deal's main stumbling blocks and ending more than two years of merger talks.
In September, BA, Iberia and American Airlines signed off on a long-awaited strategic alliance that will see them cooperate on flights between Europe and North America.
Faced with mounting competition from low-cost, no-frills upstarts, the notoriously low-margin airline industry has been going through a period of rapid consolidation and analysts believe larger carriers now need partners to stay ahead of the competition.
More than 99 percent of the British carriers' shareholders approved the deal, although the turnout at the vote in London was hit by a public-transport strike.
The BA-Iberia tie-up is expected to generate cost savings of EUR€400 million after the fifth year.