Virgin unhappy over BA-Iberia Merger

British Airways has announced its plan to enter into a merger agreement with Iberia. Merger is modeled on the lines of Air France-KLM Alliance, where both the brands maintain their individual identity. However, such plan has evoked seething reaction from Virgin. Virgin has claimed that proposed merger would lead to anti-competitive monopoly. Said merger would lead to the creation of second-biggest air carrier in Europe. Number one slot is occupied by Air France-KLM.

Virgin currently claims 2.5% of Heathrow slots. In comparison, BA has 42%of slots and Iberia owns 2.5%. Upon merger, both the slots will be amalgamated. Virgin claims that said amalgamation would allow the concerned airlines to dictate fares and hence limit the competition. Virgin spokesman said that main objection to the merger is its scale. However, Virgin is waiting for more information before deciding to file a formal objection.

Both airlines are certain of getting EU endorsement since BA is already sharing revenues and profits on Iberian routes from Heathrow. BA and Iberia also own stake in one another. However, both parties have still to mull over certain issues such as senior appointments, distribution of shares and headquarters location etc. BA is currently valued at 3.4 Billion Euros whereas Iberia is worth 1.5 Billion Euros.

Deal has received mostly positive reactions from market. Flight Center MD Chris Galanty said that successful merger would be good for industry and both the parties should be prepared for trade distribution. Merger has received positive feedback from Investment Bank Dresdner Kleinwort.

Please visit www.airfrance.com, www.virgin-atlantic.com and www.britishairways.com for more