Following a lengthy negotiation period, British Airways (BA) and Iberia Airlines have reportedly come to a preliminary agreement to merge, in a bid to help better cope during the global economic downturn as the industry continues to experience lower cargo and passenger traffic.
The merger, which will see the formation of a new company called 'TopCo', will make the air carrier one of the largest airlines in Europe, competing with the likes of Lufthansa and Air France-KLM, Reuters reported.
BA will hold 55 per cent of the combined firm, with Iberia retaining 45 per cent, with the both companies anticipating a €400m saving after a five-year period.
'The merger will create a strong European airline well able to compete in the 21st century,' BA chief executive officer Willie Walsh told Reuters. 'Both airlines will retain their brands and heritage while achieving significant synergies as a combined force.'
Iberia chairman Antonio Vazquez added that the groups were laying a foundation for what will become one of most important airlines in the world.
The deal is expected to be finalised in 2010, although any merger must first be approved by the European Commission.
Iberia also reported on its third quarter results today (13 November), with the company making a net consolidated loss of €16m during the three-month period, down from a profit of €30.4m last year.
Airfreight traffic declined 19.3 per cent through the first nine months of 2009, the group added, although the decline was less steep in the third quarter, down 8.6 per cent in tonne/kilometre terms.
