Airlines merger expected in late 2010

Fri Nov 13 2009 16:39:22

British Airways and Spanish airline Iberia expect to merge by the end of next year after reaching a preliminary agreement.

Months of speculation ended when a joint statement said the boards of the two airlines had agreed a binding memorandum of understanding setting out the basis for a proposed merger.

The statement said amalgamation would produce annual savings of around 400 million euros (£358.3 million) which a BA spokeswoman said were expected to come from joint IT and procurement rather than job losses additional to those already announced.

Last week when the British airline announced a record pre-tax loss of £292 million for the six months to the end of September, chief executive Willie Walsh warned manpower would be reduced by the equivalent of 3,000 roles by March next year.

Mr Walsh - who will become group chief executive - said: "The merger will create a strong European airline well able to compete in the 21st century.

"Both airlines will retain their brands and heritage while achieving significant synergies as a combined force."

The proposed merger would create an airline group with 419 aircraft which would fly to 205 destinations.

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