British Airways and Iberia Finally Get Closer to Almost Possibly Merging

British Airways, Iberia, Mergers/Finance

Has there been a stranger courtship than that between British Airways and Iberia? The airlines, which have been talking for years, have finally agreed to merge, sort of. I mean, it’ll get there eventually.

I believe talks began in 1784 when King George III, still sad about losing that whole American BA/Iberia Merger A Long Time in the MakingRevolutionary War thing, decided to go take over Spain instead. (Note: please do not try to double check this in your history books). Though Englaspaña didn’t pan out thanks to bad blood over that whole Armada tiff a couple hundred years earlier, they agreed that were airplanes to ever be invented, they would talk about merging the two entities.

Now, a few hundred years later, the dream has become a reality. Well, almost a reality. If you happen to love BA or Iberia, don’t fret. Not much is likely to change for travelers. Think of it as being similar to the Air France/KLM merger or even Lufthansa’s takeover of, uh, most of Europe. There will now be a holding company called TopCo (wtf) that will be held by the current BA and Iberia shareholders. BA gets 55% and Iberia gets 45%. The brands will remain separate.

Is anyone else surprised how much Iberia is getting in this deal? I mean, I always thought of BA as part of the big three with Lufthansa and Air France, but this just makes them seem tiny. Well, whatever. It doesn’t matter to me. I don’t hold shares in either company, but even if I did, it’s not a done deal just yet.

There isn’t actually a fully defined agreement yet. That should be done by March . . . 2048. Ok, not really. March 2010 it is. Then they expect the Boards to vote by the end of 2010, and that’s when it will be done . . . assuming the European Union doesn’t have any issues. In other words, let’s talk about this in a year when something might actually be happening.

I had someone ask me whether I thought this meant that the British Airways/American Airlines antitrust immunity proposal would be hurt since Iberia and British Airways were consolidating. I don’t think so at all. Though we talk about BA/AA, Iberia is actually already a part of that deal. So this doesn’t change a thing.

So what do we take away from this? Nothing yet. Just keep waiting and we’ll see if it actually goes through. Until then, keep flying as if nothing happened.

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7 comments on “British Airways and Iberia Finally Get Closer to Almost Possibly Merging

  1. TopCo sounds more American then British or Spanish.

    The superior British attitude teamed with the stubborn Spaniards. This could take awhile is right.

  2. TopCo is a placeholder name for the top level holding company in the proposed corporate structure (similar to Air France-KLM). If this transaction is actually consummated, the name will almost certainly change from TopCo to something like BA Iberia S.A.

  3. That’s not the half of it – you’ve also got the blackhole that is the BA pension fund on the one hand, and staff costs and attitude at IB on the other. And then the fun and games will begin with Willie Walsh as CEO.

    “With British Airways, Willie has made vague threats that if pilots or cabin crew do not like his terms, they can leave – en masse if necessary. If this were to happen at British Airways it would be a cause for real concern – if it happened at Iberia, it could well be the best thing for the airline….”

    See http://insidetraveller.co.uk/blog/?p=512 for more of this…

  4. BA are screwed. An acquaintance of mine is a BA pilot and flight simulator instructor – he’s just gone down to 25% FTE for the next 18 months – this equates to probably 1 days flying a week, if that. As shingles suggests, the pension fund at BA may well drag them under.

  5. I read a rumour last night (yep, only a rumour, but still) from a City analyst that BA had only snapped up Iberia to offer them to Lufthansa, in return for BMI and more importantly BMI’s slots at LHR….

    Hopefully just a rumour.

  6. SimonF wrote:

    I read a rumour last night (yep, only a rumour, but still) from a City analyst that BA had only snapped up Iberia to offer them to Lufthansa, in return for BMI and more importantly BMI’s slots at LHR….
    Hopefully just a rumour.

    I can’t see any way that the EU would ever allow that to happen.

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