Shareholders to vote on BA merger

The final hurdle to a merger between British Airways and Spanish carrier Iberia should be cleared when shareholders of the two airlines vote on the £5 billion link-up.

BA’s shareholders will vote at a meeting in Westminster, while a similar meeting is being held by Iberia in Madrid.

Shareholder approval will lead to the creation of a new parent company for the two carriers – International Airlines Group (IAG) – but both airlines will keep their individual identities.

The merger, expected to be completed in January, will create an airline of 408 aircraft carrying around 57 million passengers a year. Between them, the two carriers have more than 57,000 staff and fly to more than 250 destinations.

One of the key benefits of the merger to BA is the access it will now get to South America.

At present, BA flies to only three South American destinations – Rio de Janeiro and Sao Paulo in Brazil and Buenos Aires in Argentina. Iberia also flies to these three cities but also operates to eight other South American destinations.

Similarly, Iberia will gain from BA’s more extensive North American operations, with the two carriers able to share information on fares, schedules and routes.

BA chief executive Willie Walsh will become the IAG chief executive, with BA’s chief financial officer Keith Williams becoming the new BA chief executive.

Mr Williams’ current BA position will be taken by Nick Swift, who is currently finance boss at transport company Go-Ahead.

Once the deal is completed early next year, shares will trade on the London Stock Market under the IAG name. One stumbling block to the merger was the large BA pension deficit but Iberia said it was happy with the steps BA was taking to tackle this problem.