Iberia and British Airways announce merger launch date

The date was disclosed in Madrid yesterday at a joint press conference by Iberia Chairman Antonio Vázquez and British Airways CEO Willie Walsh, who will serve as chairman and CEO, respectively, of IAG.

Yesterday the two airlines held meetings at which their shareholders voted to approve the merger, the final step in a process that began a year ago with the signing of a binding Memorandum of Understanding.

The newly merged company will become Europe's third largest and the world's sixth largest airline group by revenues, which for the two airlines added up to 13,800 million euros last year. The two carriers fly to more than 200 destinations on five continents, operate fleets totalling more than 200 aircraft and last year carried some 58 million passengers.

The merger brings the two airlines to the fore of the airline industry consolidation process. Two months ago they reached a joint business agreement with American Airlines for combining their strengths on North Atlantic routes. The International Airlines Group will seek to grow via new mergers and acquisitions in the future, enabling it to continue to advance in the reorganisation of the industry.

The airlines expect annual synergies worth some 400 million euros starting the fifth year following the merger. Some 60% of these synergies will arise from cost savings, and 40% from larger revenues.

IAG is registered as a Spanish company with tax domicile in Madrid, where its board of directors and general shareholders meetings will be held. Its financial and operational headquarters will be located in London.

The IAG board, which has already been constituted, is made up of 14 members, seven from each airline. Three people from each company will serve on the six-member group management team.

Iberia and British Airways, which will continue to operate independently and under their own brands, are highly complementary and market leaders on routes to Latin America and to North America, respectively. They operate from two of Europe's most important hubs.

Commenting on the merger, Iberia Chairman Antonio Vázquez said: "Today we are announcing the launch of one of the most important deals in the present and future of the airline industry. We are joining forces to become the genuine protagonists of the consolidation that has become necessary for our industry in recent years. We are now preparing for take-off, propelled by two of the more powerful and efficient engines in the industry: Iberia and British Airways".

Willie Walsh, CEO of British Airways, said: "This is the start of our new and exciting adventure. We have a long history and complement each other with our network strengths and strong brands in different markets. IAG has been deliberately structured to be scalable to accommodate future growth through further mergers and acquisitions. We don't want to stand on the sidelines - we want to lead the industry's consolidation".