British Airways and Spanish carrier Iberia have agreed to merge in all-share deal to create a combined entity of 15 billion euros ($22 billion) in revenues.
Under the terms of the agreement, British Airways will hold 55 per cent in the new entity -- TopCo -- and the rest will go to Iberia. TopCo would be registered in Spain but will have the financial headquarters in London. The new firm will be listed on London Stock Exchange.
The boards of the two firms have entered into an MoU for the proposed merger. A joint statement from the two said there would be parity at board and management level.
"The airlines believe there is a compelling strategic rationale for the transaction, which is expected to generate annual synergies of approximately 400 million euros ($595 million), and benefit both companies' shareholders, customers and employees," the statement said.
The announcement of merger between the two loss-making airlines comes at a time when the global aviation industry grappling with the worst crisis it has ever faced.
British Airways Chief Executive Willie Walsh said, "The merger will create a strong European airline well able to compete in the 21st century. Both airlines will retain their brands and heritage while achieving significant synergies as a combined force."
Post merger, which is expected to be completed in late 2010, the combined group will offer customers connections to 205 destinations and would have a fleet of 419 aircraft.
