Iberia posts loss as Spanish see BA tie-up as best option for survival

Iberia is the Spanish national carrier. Iberia reported their third-quarter losses of €16.4m. The country was happy when they heard about the possibility to become one with British Airways in order to survive.

Last week, Spanish newspapers announced this message on their front pages. The merger can be seen in the general consensus of a “necessary inevitability”. Analysts believe this is the best option for the airline that is struggling because of economic recession: not only to survive but the merger was also a crucial event for the sector. Next to these facts, passengers will also benefit.

British Airways is a dominant partner for travelling to North America, Asia, the Far East. This in combination with Iberia that’s strong in travelling to Latin America and the Caribbean. This means big benefits for the passengers!

It’s not an accident this 2 companies found each other. Both companies have suffered huge financial losses, so a merger is the best opportunity for recovery. By merging Iberia, British Airways will be able to reduce operating costs. On the other hand, there might be some problems with trade unions. The company will be emerged to fire employees, which is inevitable in any merger.

The airline is not having just financial problems. It is already having industrial disputes with its employees and last month it was forced to cancel more than 400 flights in a two strike by cabin crews over pay.

Investors are very enthusiastic. Iberia’s share price will rise 11.78pc, just because of the announcement of the merger. But not everyone is happy with the merger. Some Spaniards saw a merger with another troubled partner as against the interests of Iberia. They believe it is a marriage of losers.

I am doubting if Iberia made the correct choice by merging with British Airways. Both companies weren’t very successful during the recent past. Just looking to the figures, I would say it was a bad choice. On the other hand, a merger can save both companies when they can recover little by little by executing their core business. The merger will have some contrary wind of trade unions. The fact that over 400 people will lose their job is a main point of interest! The rise of the share price will attract investors that are likely to take some risk because everyone is aware of the fact the merger can’t ensure the survival of both companies...

Posted by Joachim De Zutter

Source: http://www.telegraph.co.uk/finance/newsbysector/transport/6562815/Iberia-posts-loss-as-Spanish-see-BA-tie-up-as-best-option-for-survival.html