BA and Iberia complete merger as strike threat looms (Roundup)

Jan 21, 2011, 17:18 GMT

London/Madrid - British Airways (BA) and Spain's Iberia formally completed their merger Friday, which will rank the new company among the world's top six airlines and the third-biggest carrier in Europe.

However, fresh trouble loomed for BA as cabin crew staff voted overwhelmingly Friday for strike action in a long-running dispute with management.

The Unite union said 78.5 per cent of members voted for industrial action, following 22 days of strikes last year.

It named no dates for the new walkouts, but offered further negotiations to BA management.

After the union's main demands over pay and conditions for cabin crew members were settled late last year, the dispute now centres on the removal of travel concessions from workers who went on strike previously, and on disciplinary action taken against union members.

Earlier, a spokesman confirmed that BA and Iberia registered their merger in the Madrid Mercantile Register, thus making it effective.

Shares of the new holding company, International Consolidated Airlines Group (IAG), will be listed on stockmarkets in London and Madrid on Monday.

The completion of the merger comes 24 years after BA's privatisation under the government of Margaret Thatcher, when it joined the London stockmarket in a high profile flotation that was 11-times oversubscribed.

BA and Iberia, which will both retain their separate brands, hope that the merger will save the new group an annual 337.3 million pounds (539 million dollars) by its fifth year.

The new company will have 419 aircraft flying to 205 destinations and will be Europe's third-biggest airline by market value after Lufthansa and Air France-KLM, analysts said.

BA, which returned to profit last October for the first time in two years, hopes to benefit from Iberia's strong presence in South America, while Iberia will code-share flights on transatlantic routes.

BA chief executive Willie Walsh will step down to take up the same role at IAG in a move that will see his basic pay rise by 12 per cent to 825,000 pounds a year.

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