BA And Iberia: Merger Positive For Passengers

JANE WARDELL

LONDON (AP) — British Airways PLC and Spain's Iberia SA talked up the benefits of a proposed $7 billion merger on Friday, dismissing criticisms that the deal could increase fares, reduce competition and drag down service standards at Britain's flagship carrier.

The agreement ends more than a year of talks between BA and Iberia aimed at finding a way for the two loss-making carriers to share resources amid slumping demand for air travel.

But while they argued that combining BA's North American routes with Iberia's Latin America services would be good for shareholders and travelers alike, there were questions about BA's growing dominance given its also waiting for the green light on a tie-up with American Airlines.

Unions also warned that they were not prepared to back the merger, which the airlines aim to close by late 2010, without commitments to avoid layoffs.

Under the preliminary deal signed off by the BA and Iberia boards late Thursday, the two carriers will continue as separate brands and operating divisions under a holding company registered in Madrid but with its main offices and primary stock exchange listing in London.