British Airways and Spain’s Iberia have finally signed a merger deal to create one of the world’s largest airlines.
With combined losses last year of 750 million euros they hope to cut their annual costs by 400 million euros to better compete with larger rivals Lufthansa and Air France-KLM.
The new company is called International Airlines Group, but the BA and Iberia brands will continue to operate separately.
BA shareholders will own just over half the stock.
The current total fleet is 408 planes carrying over 58 million passengers annually.
This deal positions the companies for further consolidation.
BA and Iberia are also looking to form an alliance with American Airlines to take advantage of the US/EU “Open Skies” agreement, liberalising transatlantic flights.
At the same time, sources said United Airlines was in merger talks with US Airways in a deal that could create the second-largest carrier in the states.
Any such merger would have to get the approval of unions – particularly the pilots – and competition regulators.