British Airways and Spain's Iberia To Create Europe's Second Largest Airline

British Airways and Spanish carrier Iberia have taken a further step towards creating Europe's second-largest airline group after signing their long-awaited merger deal.

Photo: British Airways and Spain's Iberia To Create Europe's Second Largest Airline

The merger, which they expect to complete in late 2010, will yield an airline with 408 aircraft and carrying more than 58 million passengers a year.

BA hailed the deal as a good result for shareholders, customers and employees and said it would deliver annual cost savings of about £350m within five years, Sky News reported.

BA chief executive Willie Walsh said the merged company will provide customers with a larger combined network.

'It will also have greater potential for further growth by optimising the dual hubs of London and Madrid and providing continued investment in new products and services,' he added.

BA chief executive Willie Walsh said the merged company will provide customers with a larger combined network.

'It will also have greater potential for further growth by optimising the dual hubs of London and Madrid and providing continued investment in new products and services,' he added, Daily Mail reported.

The firms will cancel their Treasury shares, and their cross-ownership stakes -- British Airways currently has 13% of Iberia, and Iberia has 9% of BA -- won't be eligible for the swap.

The deal needs European Commission approval and the vote of their shareholders, which they are planning to hold in November.

The two shares have traded pretty closely since the November announcement. Both shares were marginally higher on Thursday, and year-to-date BA is up over 27% and Iberia has climbed 39%, MarketWatch reported.