British Airways and Iberia merger creates 3rd largest European airline

Two unprofitable carriers, British Airways (BA) and Spanish carrier, Iberia, signed a merger agreement on Thursday with the expectation that doing so will save them US$533 million a year and secure th

Two unprofitable carriers, British Airways (BA) and Spanish carrier, Iberia, signed a merger agreement on Thursday with the expectation that doing so will save them US$533 million a year and secure their future. This merger will make them the 3rd largest airline in Europe according to revenue standards.

The new company will be called International Airlines Group, but the BA and Iberia brands will continue to operate as normal.

In total the group will operate 408 aircraft and carry more than 58 million passengers a year, the two companies said.

“The terms and conditions of the merger agreement are in accordance with the memorandum of understanding signed by both airlines in November,” the companies said in a joint statement.

BA chief executive Willie Walsh said the merger would be good for customers. “The merged company will provide customers with a larger combined network,” he said.

Iberia’s chairman and chief executive Antonio Vazquez said the merger was important to the future of the airline industry. “This is an important step in the process towards creating one of the world’s leading global airlines that will be better equipped to compete with other major airlines and participate in future industry consolidation,” he said.

The International Air Transport Association announced the global airline industry sector would post a loss of US$2.8 billion in 2010, with European and US airlines suffering the most.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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