BA-Iberia merger creates third largest airline

Madrid/London: British Airways and Spain's Iberia announced on Thursday a preliminary agreement for a $7-billion (Dh25.6 billion) merger to create the world's third-largest airline by revenue.

The deal, which the companies hope to close by the end of 2010, ends the British flag carrier's long pursuit of Iberia to create an enlarged group, able to cope with the industry's largest downturn in decades.

205 destinations

BA shareholders will have 55 per cent of the combined firm, to be headquartered in London with 419 aircraft flying to 205 destinations, while Iberia shareholders are to get 45 per cent.

In a joint statement, BA and Iberia said the merger would provide "enhanced scale to compete with other major airlines and participate in future industry consolidation".

The new company will combine British Airways' strong position in Europe-to-North America traffic with Iberia's Latin American business.