Merger Talks between BA and Iberia Progress
Thursday, 5 February 2009：British Airways and Spain’s Iberia announced Tuesday that their merger talks were going well, hinting that news of a possible deal could arrive as early as next month.
BA Commercial Director Robert Boyle said, despite complications arising from the volatile exchange rates and stock markets he was positive on the chances of a deal.
"Discussions are progressing well, but deals are never done until they are done," he said.
"Current financial conditions, with very volatile stock markets and exchange rates does make it a particularly challenging time to conclude that negotiation."
Iberia Chairman Fernando Conte told journalists at the oneworld alliance meeting in Madrid, "I am an optimist. I believe we are going to try to find the route so that this deal happens. February is going to be a very important month but March is going to be a month in which we will be able to give news."
Mr Conte said the two sides were trying to value the respective businesses using a variety of methods.
"Elements of the market, not only right now, but historic. There are elements of discounted cash flow from business plans that we have put in place together. And also we have the views of analysts".
British Airways´ market capitalization has fallen below that of Iberia’s market in recent weeks because of the weakened pound and a drop in BA´s share price following a profit warning.
BA had expected to comprise around 65 percent of the combined airline when merger talks were announced last July.
Despite now having a bigger market capitalization than BA, when asked if the division of the new company would be somewhere between the 66:33 split and 1:1 division, Conte said: "probably, yes".
He added that "without doubt" the exchange rates were an element that had to be taken into account when valuing the two airlines.