British Airways and Iberia have reached an agreement on a merger plan for the two carriers. If the merger occurs, the combined carrier would serve 205 destinations with 419 aircraft.
Photo credit: Chris Weyer. Used with permission.
Under the terms of the deal, a new holding company called TopCo, which would be incorporated in Madrid (though the financial headquarters would be in London), will be lead by current British Airways chief Willie Walsh. The BA shareholders will take a 55% stake, with Iberia shareholders holding the balance. The company will own two operating companies, one for each carrier.
The main benefit for customers that BA/Iberia are pushing (see the presentation on the deal here) is the combined route map of the two airlines:
Service to the South Atlantic was especially pushed, as the merged airline will have the most South Atlantic destinations of any European airline.
The press release also noted that “the group’s network strategy will be developed in a way that reflects the importance of both
London and Madrid hubs. There will be a balanced long-term development of the networks served from each of the Madrid and London hubs and there will be a reasonable division of opportunities between the two networks.”
It is also being expected that their will be approximately €400 in annual savings:
This isn’t a done deal – there are a few steps that need to happen. The merger agreement has to be signed, which is expected to happen during hte first quarter of next year. The deal also requires government approval. According to the current timetable, the deal is expected to be presented to shareholder in November 2010, with the deal closing soon after if it is approved.
Of course, Ryanair had to share its thoughts in its usual hilarity in a press release titled “Ryanair Welcomes BA’s and Iberia’s White Flag.” Ryanair head Michael O’Leary said:
The merger of BA and Iberia is like two drunks trying to prop each other up; both have reported large losses, both are facing a winter of industrial action and both charge high fares and fuel surcharges…this merger will be great for Ryanair’s growth and we look forward to welcoming many more millions of BA’s and Iberia’s passengers as they switch to Ryanair’s low fares flights.
I’m sure Virgin will have their own things to say as well.
Anyway, this is a big deal. Let’s see how it proceeds.
Wow – they just had to use the term “synergy,” didn’t they?
So it really isn’t a merger of the carriers — there will still be Iberia aircraft and BA aircraft, right? More like Republic owning Midwest and Frontier and … Or KLM and Air France… or LH, Swiss, ….
@Gray — I am sure you could have played BS bingo during the press conference.
http://www.bullshitbingo.net/cards/bullshit/
Yep, you got it Oliver. Just like AF-KL. Or LH-LX-OS-BD….I give up.
Do you think a deal like this where each involved airline retains at least some of their “personality” is a model for the likes of Continental and United? Or is the situation in Europe more unique in that national identities are so tied to the carrier and its name that would be difficult to convince the
- Spanish people to fly British Airways
- Swiss people to fly Lufthansa
- Dutch people to fly Air France
- …
I’d agree with you 100% on Europe being different here, especially when one is dealing with flag carriers. And, I think that might have been what had happened with AF’s LAX-LHR experiment.
The closes thing I thing we have right now here in the States is what Republic is doing with Midwest and Frontier.
Good question Oliver. But should Switzerland be in there since Lufthansa hasn’t really merged them, they still have their own name and identity.