The possible merger between British Airways and Iberia has been the basis for many analysts’ “buy” or “hold” recommendations on the UK carrier.
Not so the credit agencies. This from Standard & Poor’s.
LONDON (Standard & Poor’s) May 8, 2009–Standard & Poor’s Ratings Services said today that it lowered to ‘BB’ from ‘BB+’ its long-term corporate credit rating on U.K.-based British Airways PLC (BA), reflecting our view of a significant worsening in the trading outlook for BA as the economic downturn takes hold. The outlook is stable.
…
We understand that BA is in negotiations over a potential merger with Spanish airline Iberia. Based on current information, we do not factor this into our rating or outlook.
The merger talks between Iberia and BA have been going on since July 2008 and have proved to be more delicate than a pilot’s ego, swayed by everything from temporary developments like swine flu to more intransigent issues like pensions and how the merged airline will be split between the two companies’ shareholders.
BA shares were down about 5 per cent in London trading on Monday morning, in any case.
Related links:
British Airways’ pension puff – FT Alphaville