Iberia and BA formalise merger structure

Iberia and BA formalise merger structure

British Airways and Iberia have formally agreed upon their corporate structure partnership, in the latest sign that the merger of the two carriers is on schedule for completion by this December.

The two flag carriers have signed off on a 91-page merger plan document before filing it with Spain’s stock market regulator.

The latest step in the drawn-out process, which began two years ago, follows the signing of a definitive merger agreement in April this year.

Under the structure, both national flag carriers will preserve their respective brands and international flying rights. However they will share a combined fleet of over 400 aircraft and will carry some 58m passengers a year to 200 destinations.

Iberia has confirmed its existing assets and liabilities would be placed in an operating subsidiary called Iberia Operadora.

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The main company would then be merged with BA Holdco SA, BA’s new Spanish vehicle, and with International Consolidated Airlines Group (AIG), which will be the holding group for the merger, reports the Financial Times. Shares in AIG would then be exchanged for existing stock in BA.

The document states that Iberia’s right to withdraw from the merger agreement if the final agreement between BA and the trustees of its pension funds “is challenged by the UK pensions regulator or is not satisfactory in the reasonable opinion of Iberia because it implies a materially detrimental modification of the economic premises of the merger.”

The airlines said in the filing that they expected “to present the transaction for shareholder approval in November 2010, with completion expected ... one month later”.