British Airways and Spanish airline, Iberia, have merged. International Airlines Group, as the combined company will be called, will be owned by a holding company. International Consolidated Airlines Group, shall be registered in Madrid and own the Iberia and British Airways operating companies.
The measure to pass the merger met with approximately 99 per cent approval from British Airways shareholders and nearly unanimous approval at Iberia, as well. The announcement was held in Westminster, at the QE2 centre, where a scant 80 or so British Airways shareholders attended.
There was a little predictable dissent on the floor when a single shareholder, John Farmer, expressed views against all future IAG shareholder meetings being held in Madrid. Martin Broughman, current chairman of British Airways said that it was decided that it was a better idea to move the tax residence to Spain and keep the corporate headquarters of IAG in the UK.
Broughman was asked if this was a good time to merge with Iberia, given Spanish economic issues. His single reply was, “Yes.”
Also, by headquartering the new company in Madrid, the combination was considered a merger and not a takeover. A takeover would have demanded British Airways pay a premium, which was avoided by making the company a Madrid registry.
Both Iberia and British Airways will retain their national identities, their brands, and flying rights, even though the companies will be traded on the market as IAG and not BA beginning 24 January 2011.
The combination of Iberia and British Airways creates a European powerhouse. Together, they project more than £12 billion of annual revenue. They will carry around 58 million passengers per year and operate slightly more than 400 aircraft.