A giant of the air is born
Wednesday 26, January 2011
The merger of Iberia and British Airways became a reality, as shares in the new International Airlines Group (IAG) parent are listed for trading on the stock exchanges of London, Madrid, Barcelona, Bilbao and Valencia.
The new airline group is Europe's third-largest and the sixth-largest in the world by revenues (more than 14,000 million euros), with a fleet of 406 aircraft and 55 million passengers in 2010.
The merger will facilitate access for customers of both airlines to a network of 204 destinations around the world. For Iberia customers, this means more facilities for travel to Asia, where British Airways is well established, while British Airways customers will have more options for travel to Latin America, where Iberia is market leader and flies from Madrid to 19 destinations.
Passengers will also enjoy better connections and timetables, since the two airlines will coordinate their services. In coming weeks and months the flights operated by each airline will progressively become available on the other's web site and telephone reservations lines.
It will also be possible to combine fares of the two airlines, and to choose the most suitable. Other advantages to passengers include access to more than 120 VIP lounges in airports around the world. Frequent flyers will also gain from the coordination between Iberia Plus and BA's Executive Club organizations. Benefits will be increased, though the two will remain separate.
To mark the launch of the newly merged airlines, starting today cardholders of Iberia Plus and Executive Club will get double points for travel between London and Madrid, Barcelona and Malaga. Iberia Plus members will get double points for flights with BA to Asia and the Middle East, while Executive Club members will get double points for flying with Iberia to Central and South America.
The merger will also make Iberia and British Airways stronger and more competitive, enabling them to offer better services to customers.
The airlines expect annual synergies worth some 400 million euros starting the fifth year following the merger. Some 60% of these synergies will arise from cost savings, and 40% from larger revenues.
IAG is registered as a Spanish company with tax domicile in Madrid, where its board of directors and general shareholders meetings will be held. Its financial and operational headquarters will be located in London.
The IAG board, which has already been constituted, is made up of 14 members, seven from each airline. Three people from each company will serve on the six-member group management team.
Antonio Vázquez, chairman of IAG and Iberia, and Willie Walsh, CEO of IAG, both attended the opening of trading on the London Stock Exchange this morning. Antonio Vázquez said: “Today a major new player in international aviation has been born and British Airways and Iberia have achieved their ambition of playing a full role in industry consolidation. IAG is the third largest scheduled airline group in Europe and the sixth largest in the world, based on revenue. Together, Iberia and British Airways fly to over 200 destinations on more than 400 aircraft. They have joint revenues of more than €14 billion euros and last year carried 55 million passengers”.
Willie Walsh said: “IAG has a great future ahead of it. The first two airlines in the group, British Airways and Iberia, will retain their strong brands and have complementary networks that operate from two of the biggest hubs in Europe. The merger will lead to annual synergies of €400 million from year five and benefit IAG shareholders and British Airways’ and Iberia’s customers and staff. British Airways and Iberia are the first two airlines in IAG but they won’t be the last. Our goal is for more airlines – but, importantly, the right airlines – to join the group. Today is the first step towards creating a multinational multi-brand airline group.”
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