British Airways and Iberia on Thursday announced a definitive merger agreement, ending nearly two years of often-strained negotiations on the creation of a Europe's third-largest airline group.
The companies, which have both been battered by competition from low-cost carriers and the global downturn in business travel, said the merged group would boast a 408-strong fleet, and carry more than 58m passengers a year to 200 destinations.
BA's chief executive, Willie Walsh, will take up the CEO position at the new holding company, to be known as International Airline Group. Antonio V?zquez, Iberia's chairman, will take up the same post in the new organization.
BA shareholders will hold 55 percent of the new company, compared with 45 percent for Iberia's owners, but each airline would also have its own chief executive and operating company in London and Madrid to preserve both brands and existing international flying rights. Current BA shareholders will receive one share in the new company for every one held in the UK airline, while Iberia's shareholders will get 1.0205.
The carriers claimed on Thursday the deal, which is expected to be completed by the end of this year, would generate synergies of about ?400m ($533m) by the fifth year.
One important hurdle to the completion of the deal had been BA's ?3.7bn ($5.6bn) pension scheme deficit. As outlined under a memorandum of understanding signed last November, Iberia remains entitled to terminate the merger agreement if a pension recovery plan agreed between BA and its pension trustees proves "materially detrimental to the economic premises of the proposed merger".
If completed, the tie-up will create Europe's biggest airline group after Lufthansa of Germany and Air France-KLM. It must clear competition authorities in Brussels and get approval from each airline's shareholders.wow gold
As part of the political and regulatory demands posed by the deal, the airlines agreed last year that the new group would have its headquarters in London but be registered and tax-resident in Spain, where it would also hold most board meetings and all shareholder meetings.
The airlines confirmed on Thursday that the holding group would have its premium listing on the London Stock Exchange, but also be traded on the Madrid Bolsa through an interconnection system known as the "Mercado Continuo."
Complications related to the market regulators' review of the proposed listings had made it impossible to meet the deadline, which has been set for last Wednesday.
Mr Walsh saidwow powerleveling
on Thursday: "The merged company will provide customers with a larger combined network. It will also have greater potential for further growth by optimizing the dual hubs of London and Madrid and providing continued investment in new products and services."