Dubai: British Airways is looking at benefits worth 400 million euros (Dh2 billion) from its proposed merger with Spanish national carrier Iberia, a top official has said.
Britain's national carrier posted a surprise third quarter profit as the global aviation industry gradually recovers from record losses.
Merger talks that began in July last year are coming to a close and company officials say the deal will be finalised by year-end.
"This will bring lots of benefits to our customers. The offer will be wider to customers, especially to the North Atlantic and South America on the Spanish route.
"We see a lot of synergies with Iberia," Paolo De Renzis, BA's commercial manager for the Middle East, told Gulf News.
He said that there would be cost-cutting measures in terms of procurement.
It posted a record £217 million (Dh1.25 billion) loss for the first half of the last fiscal year and shed 1,900 workers.
In its third quarter that ended on December 31, however, the airline jumped to a profit of £25 million.
The surprise profit that beat analyst expectations came after significant cost-cutting measures and profitable fuel prices.
Employee costs declined 10.2 per cent in the quarter to £492 million and the fuel bill dropped by 22 per cent. The carrier intends to cut another 3,000 personnel worldwide by March 31. BA currently employs 38,704 workers, and Iberia has over 20,000.
Also a victim of diminished air travel demand, Iberia posted a record £217-million loss for the fiscal first half.
TopCo, a holding company of the two airlines, was announced earlier. BA's chief executive Willie Walsh will also head the new company. The ownership would be split 55 per cent and 45 per cent in BA's favour.
While both airlines made job cuts to deal with falling profits, the British carrier faces a threat of industrial action.
A planned strike by Britain's biggest union Unite over Christmas and New Year was averted when the UK's High Court over-ruled the ballot due to irregularities, but another strike and legal action looms.
Unhappy over changes in a cabin crew package that includes a pay freeze this year and a reduction in cabin crew numbers on long-haul flights, Unite will hold another ballot this month.
"We are very disappointed because we think the deal we offered to the cabin crew is very fair," De Renzis said. The airline is working to limit the damage if another strike bid is successful.
"We are also counting on the support of our partners to operate most of the routes. We believe we have a strong back-up plan," he said.
In an attempt to revive revenues from premium passengers, the carrier is investing £100 million to overhaul first-class seats in its fleet, De Rensiz said.
It will begin by fitting its Boeing 777s and then move on to the rest of the aircraft that still offer the class. The airline will take 24 months to overhaul all the long-haul fleet.
"We do believe that there is a good first-class market. The Middle East is one of those markets where there is demand for first class. Where it makes sense, we will have first class," De Renzis said.
"Not all the routes will have first class, we already have routes where we only have Club World."
The company posted a 1.6 per cent increase in long-haul premium traffic in December, the second straight monthly growth, and ranks as the leading airline across the North Atlantic, the busiest route for first- and business-class travel.
In its expansion effort in October 2009, British Airways launched new services to Sharm Al Shaikh, Maldives and Las Vegas as well as twice-weekly flights from Gatwick Airport to Montego Bay and Punta Cana in the Dominican Republic.
