British Airways - Iberia merger

29 Jul 2008. British Airways and Iberia Airways have announced that they are in merger talks, which would create the 3rd largest airline in the world (after Southwest Airlines and American Airlines). The merger would allow the airlines to cut flights on duplicate routes. The announcement resulted in Iberia Airways shares increasing 4%, and British Airways shares increasing 7% British Airways is expected to continue to focus on the middle-east, whilst Iberia concentrates on Africa and South America. Caja Madrid, a 23% shareholder in Iberia, is said to be supportive of the merger.

History of the merger

29 Jul 2008	British Airways and Iberia Airways confirm that they are in talks for an all-share merger. The new company would be listed on both the Madrid and the FTSE 100 stock exchanges. British Airways owns 13.15% of Iberia Airways, and Iberia owns 2.99% of British Airways (and owns contracts for difference increasing its effective exposure to 6.99%).
3 Jul 2008	Confirmation that American Airlines, Iberia Airways & British Airways are in 3-way transatlantic talks.
1 Feb 2008	Willie Walsh announces that British Airways intends on strengthening its ties with Iberia Airways.
26 Nov 2007	Iberia Airways' shares fall by 5% in a day, following news that the British Airways - TPG led consortium had withdrawn its bid.
23 Apr 2007	British Airways sides with the consortium led by TPG, instead of making an independent bid for Iberia Airways.
30 Mar 2007	TPG (Texas Pacific Group) makes a 3.4 billion euro bid for Iberia Airways, resulting in British Airways appointing UBS to provide advise on its 10% holding.
15 Nov 2006	British Airways increases its stake in Iberia Airways to about 10%, by purchasing American Airlines' portion.
24 Jun 2004	BA & Iberia announce they will start joint accounts between the UK & Spain.
10 Dec 2003	The European Commission grants approval to British Airways & Iberia Airways to operate an alliance within the European Union.
27 Oct 1998	SEPI, the Spanish company owning Iberia Airways, sells a stake to American Airlines & British Airways (between 8.2% and 9.1% to BA).

Virgin Atlantic viewpoint

Virgin Atlantic argues that the merger will increase British Airways' dominance at London Heathrow Airport (controlling nearly 45% of landing and take-off slots), thereby resulting in less choice and higher ticket prices.