British Airways Woos Caja Madrid to Keep Qantas and Iberia Deal
British Airways is going to woo Caja Madrid, the saving bank that has a key hold in Iberia, in order to try to persuade the Spanish carrier into joining a 3-way merger. British Airways sources say that they plan to merge with Qantas first, which involves developing a dual-listed corporate structure. Then they plan to merge the two companies with Iberia. The final structuring of a deal with Qantas may be complete early next year, with a deal to follow with Iberia a few months after that.
Iberia and British Airways have been in merger talks for about 5 months now, but finalizing a deal has been delayed due to worsening pension deficit at British Airways. Executives at Iberia were stunned when British Airways announced merger talks with Qantas last week, which was initiated in August by the Australian carrier.
In the dual-listed corporate structure, Qantas will keep their Australian listing, as well as have Australian investors as majority shareholders, and British Airways will have the same in Britain. However, the two will form a single unit where directors, dividends, and management would be shared. Under the plan, Iberia would then be merged with the European half of the group.
Analysts within the aviation industry say that politics could intervene, as Caja Madrid is closely linked with the regional government, who is eager to make sure that the air routes of the city are protected. In the mean time, British Airways and Iberia have experienced some growing tension after it was revealed that Iberia was briefing hedge funds on the prospects of British Airways. Also, Fernando Conte, the Chief Executive of Iberia, told Willie Walsh, the Chief Executive of British Airways, that it was either Qantas or Iberia. This statement came after Conte had only been informed of the talks with Qantas one hour before it was announced to the public.
See one of these websites for more information about these airlines:
British Airways - www.britishairways.com
Iberia - www.iberia.com
Qantas - www.qantas.com.au