Merger talks between British Airways and Iberia have been given a boost following the sudden departure of the Spanish flag carrier’s chairman. Fernando Conte has vacated the top job, with the official line that he wanted to step down before his 60th birthday next year. But according to company sources he was ousted because of a lack of progress in merger talks with BA.
Spanish flag-carrier Iberia is heading for its first annual years in 13 years as a fall in business class traffic and a price war in economy erode margins.Chief executive Fernando Conte warned shareholders that passengers travelling business had fallen 20 percent year-on-year due to a sharp fall in business travel on its routes from Madrid to London and Latin America.
Merger talks between British Airways and Iberia are making little headway despite reassurances from both sides of an imminent tie-up, according to sources within both airlines.The number of problems to be resolved before the merger can proceed is far bigger than the respective heads Willie Walsh and Fernando Conte have revealed. A deal is unlikely to be struck before the summer, reports the Times newspaper.
British Airways has dropped its strongest hint yet that its proposed merger with Iberia is imminent, saying there is only one outstanding issue to be resolved before the deal can proceed.Chief executive Willie Walsh confirmed a number of hurdles had been overcome, including the BA’s pension deficit and the chairman and chief executive roles. Most importantly, the share of ownership has also been agreed - this was earlier seen which as the biggest challenge due to the recent slump in BA’s share price, leading to Iberia pushing for an equal equity split.
Willie Walsh has said that British Airways does not need clearance from its pension regulator for its planned merger with Iberia.“There is no cash involved - it is an all-share merger. We don’t see any issue with our trustees. This will lead to a stronger company,” Walsh told The Times newspaper.
Shares in Iberia have risen sharply despite the Spanish carrier revealing that profits have nosedived 90 percent last year to €32m (£29.6m).Ahead of a meeting with BA’s Willie Walsh, chairman and chief executive Fernando Conte also said the airline plans to cut capacity by 1.7 percent this year.
The board of Iberia will meet Thursday to study a 3.41 billion euro non-binding offer from U.S. private equity firm TPG Capital LLP, El Pais reports, without citing sources.