Shares in British Airways were up 10 per cent on Thursday afternoon amid expectations that the troubled carrier’s long-planned merger with Spain’s Iberia is finally about to happen.
But earlier in the London day there had been a lot of conflicting newsflow.
Here’s the backstory.
On Wednesday night Sky News’ City Editor Mark Kleinman revealed this on his blog:
I understand that British Airways’ (BA) merger with the Spanish airline Iberia Lineas Aereas de Espana may finally be ready for take-off.
All being well, a formal intention to merge, along with details of how the new European aviation powerhouse will be structured, could be unveiled later this week to coincide with Iberia’s third-quarter results.
Cut to the following from Reuters this morning:
LONDON/MADRID, Nov 12 (Reuters) – A merger between British Airways (BAY.L) and Spain’s Iberia (IBLA.MC) is unlikely to be finalised this week, an industry source said on Thursday, after Britain’s Sky News reported that a deal was set to be announced.
“The talks are still going on and there is no imminent announcement scheduled,” said the source, who declined to be named.
Then, to confuse matters further, Spain’s El Pais comes out with this at around 10am UK time on Thursday:
El consejo de administración de Iberia se reúne hoy de forma extraordinaria para decidir la fusión con British Airways, según fuentes conocedoras de la operación. A falta de cerrar algún fleco menor, en unas horas se anunciará o bien la fusión o, algo mucho más improbable, el carpetazo a la misma.
For non-Spanish speaking readers, this says that Iberia’s supervisory board is meeting today to decide on a merger with BA, according to those “sources” familiar with the situation. The article goes on to say that, last minute hitches aside, the merger will be announced in a few hours – or, much less likely, the talks will be terminated.
The exchange ratio for the merger, according to El Pais, has been established at 45:55 Iberia to British Airways.
We await an announcement with bated breath.
UPDATE:
British Airways released the following statement later on Thursday morning:
Further to recent market speculation, British Airways confirms that the British Airways and Iberia Boards are holding separate meetings today, 12 November, to consider a potential transaction. However, no decisions have been taken and, at this time, there can be no guarantee that a transaction will be forthcoming. A further announcement will be made in due course, if appropriate.
UPDATE II:
From a broker who has translated the latest story from El Pais. And the deal is on – from the Spanish end at least.
Iberia’s supervisory board has approved a merger with British Airways, El Pais reports on its website, citing people familiar with the situation. Says the ratio has been agreed at 45:55 (Iberia/BA), with the combined group’s financial HQ to be in London. Regarding management, Antonio Vazquez is said to be the group’s president and Willie Walsh the chairman. Adds that BA is also holding a board and is still pending approval.
And the latest share price action in BA:
Related links:
British Airways defies financial gravity – FT Alphaville
BA suffers record first-half loss of £292m – FT