British Airways has concluded the agreements that pave the way for it to take a stake in Iberia Lineas Aereas de Espana SA as part of the Spanish airline’s privatisation programme. The UK company signed in Madrid today an investment agreement with SEPI, the Spanish government agency responsible for Iberia, and a shareholders’ agreement with the other core shareholders.

Under the terms of the investment agreement, British Airways will acquire 9 per cent of the shares in Iberia. American Airlines will take a 1 per cent holding in Iberia. The value of British Airways’ investment will be in the region of £155 million (Ptas 41 billion). If the value of shares in Iberia offered through its public flotation is less, the sum paid by British Airways will be reduced accordingly.

Through its investment, British Airways will be Iberia’s key industrial partner and will have the right to appoint two directors to Iberia’s 12 person board as well as representation on all Board sub-committees. British Airways is to nominate as its directors Roger Maynard, its Director of Investments and Joint Ventures, and the Rt Hon Lord Garel-Jones, UK Foreign Minister from 1990 to 1993 and now a Managing Director of investment bankers Warburg Dillon Read.

British Airways will be working very closely with Iberia’s management to support the privatisation process and drive the future business strategy.

The shareholders’ agreement has been concluded with the institutional investors who will hold 30 per cent of the Spanish airline’s shares - Caja Madrid, the BBV bank, Logista, El Corte Ingles and the Ahorro Corporation. They will, between them, have four members on the Iberia Board.

British Airways and Iberia in February signed a commercial agreement under which they plan to co-operate in a wide area of activities, including code-sharing on flights beyond the UK and Spain, and reciprocal participation in frequent flyer programmes. These links have already started, with code-sharing introduced on 14 routes in mid June and Iberia joining the oneworld global airline alliance on September 1.

The two airlines will share best practice in all aspects of their business to help deliver the highest level of customer service and value for money, in what is becoming an ever more competitive global market.

These agreements will offer British Airways’ passengers a wider choice of services to and within the Iberian peninsular and beyond, particularly to South America, where Iberia is the leading carrier. Iberia’s customers will have more easy access to the extensive worldwide network served by British Airways, the world’s leading international airline, and those of its fellow oneworld members.

Bob Ayling, British Airways’ Chief Executive, said: “I am delighted that we have now reached agreements with SEPI and the other core shareholders on the terms of our investment in Iberia, which will underpin our commercial relationship with the airline. We look forward to working with them, and with SEPI and our fellow shareholders towards a successful public flotation of Iberia in the near future.”

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