British Airways and Iberia Merger Takes Another Step

On Tuesday, British Airways and Iberia formally agreed to details for a new corporate holding structure. This is the latest sign that the merger is continuing on schedule.

The talks for a merger between the two carriers started nearly 2 years ago, and it was just earlier this year that they signed a definitive merger agreement. In this latest step, they signed a 91-page document, which is part of the merger plan, before filing it with the stock market regulator in Spain.

Iberia says that their existing assets and liabilities will be operated by a subsidiary, Iberia Operadora. The original entity will then merge with BA Holdco SA, the new Spanish vehicle launched by British Airways. It will also be merged with International Consolidated Airlines Group, which will be the merger’s holding group. AIG stock will be exchanged for existing British Airways stock at a ratio of one for every 1 held, while they will also be exchanged for every existing 1.0205 Iberia stock held.

Despite the combined operations, both airlines will still preserve their international flying rights and respective brands. The agreement is set to produce a carrier with a fleet of 400 aircraft that will carry over 58 million passengers a year to 200 worldwide destinations.

The newly signed document also confirms that Iberia still has the right to withdraw from the deal if the final agreement between British Airways and the pension fund trustees is challenged by the UK pensions regulator or is found unsatisfactory to Iberia’s reasonable opinion. In the filing, the carriers say they plan to present the transaction for approval from shareholders this November and to complete the merger a month later.