British Airways and Iberia Merger is Delayed
The British Airways and Iberia merger has been delayed due to the managers of British Airways struggling to deal with the plummeted number of passengers on their flights. Willie Walsh, the British Airways Chief Executive, says that the merger with Iberia, a Spanish airline, is going to take longer than they anticipated with the impact of the continued economic slowdown in Britain and the United States. The passenger numbers of the UK airline declined 4.8% during September, and the numbers of their premium long-haul flights, which are vital to the carrier’s profitability, dropped by 8.6%.
The two airlines announced the planned merger during August as an agreement that would develop into the biggest carrier in Europe by its number of passengers, as well as the 3rd biggest in value. At that time, Willie Walsh said that the merger was in response to the high fuel cost crisis and the declining demand that had grabbed ahold of the airline industry. British Airways is now saying that the crisis is going to postpone the merger, possibly until mid-2009.
The delay has sparked speculation that British Airways wishes to postpone the agreement due to a collapse in the price of their shares. The stock of the airline fell by 19p yesterday, leaving it at 145p and bringing it down by 67% in comparison to its one year peak of 450p. The plummet of the carrier’s market value may give its shareholders a disadvantage for negotiating the merger’s terms. The share price of Iberia is down as well, with a decline of 57% in comparison to its one year peak of €3.70.
Visit www.britishairways.com for information on British Airways and www.iberia.com for information on Iberia.